How to Calculate Stock Profit
The basic stock profit formula is straightforward: Profit = (Sell Price − Buy Price) × Shares − Total Commissions. What trips up most new traders is forgetting to account for commissions on both sides of the trade, taxes on short-term vs. long-term capital gains, and the psychological cost of unrealized losses.
For example, buying 100 shares of a stock at $50.00 and selling at $75.00 produces a gross profit of $2,500. But if your broker charges $4.95 per trade, your net profit is $2,490.10. On a smaller trade — say 10 shares — those same commissions reduce the $250 gross profit to $240.10, a 4% drag on returns.
Understanding Break-Even Price
Your break-even price is the minimum sell price you need to avoid a loss. It factors in your purchase cost plus all trading fees. With commission-free brokers, your break-even is simply your buy price. But if you pay commissions, your break-even rises: Break-Even = (Total Cost + Sell Commission) ÷ Shares.
This matters most for small positions. A $10 round-trip commission on a $500 trade means you need a 2% gain just to break even. On a $50,000 trade, the same commission is negligible at 0.02%.
Short-Term vs. Long-Term Capital Gains
In the US, stocks held for less than one year are taxed as short-term capital gains at your ordinary income tax rate (up to 37% in 2026). Stocks held longer than one year qualify for long-term capital gains rates of 0%, 15%, or 20% depending on your income bracket. This tax difference can significantly affect your net return.
A trader in the 24% tax bracket who makes $10,000 on a short-term trade keeps $7,600 after federal tax. The same $10,000 gain on a long-term trade (15% rate) leaves $8,500 — nearly $1,000 more. For active traders, tax-loss harvesting — selling losing positions to offset gains — is a critical strategy. See our Income Tax Calculator for bracket details.
Position Sizing: How Much to Buy
Knowing your potential profit is only half the equation. The other half is knowing how many shares to buy relative to your account size and risk tolerance. Professional traders typically risk no more than 1–2% of their account on any single trade.
With a $25,000 account and 2% risk, you can afford to lose $500 per trade. If your stop loss is $5 below your entry, you should buy no more than 100 shares. Use our Position Size Calculator to determine the right trade size for your setup.
Frequently Asked Questions
How do you calculate stock profit?
Profit = (Sell Price × Shares) − (Buy Price × Shares) − Commissions. For example, 100 shares bought at $50 and sold at $75 = $2,500 gross profit. Subtract any commissions for net profit.
What is a good ROI on stocks?
The S&P 500 averages about 10% annually over the long term. Individual trades vary widely. Day traders typically target 1–3% per trade with strict risk management. The key metric is not any single trade's ROI but your overall win rate multiplied by your average gain vs. average loss.
How do commissions affect stock profits?
Commissions reduce net profit and raise the break-even price. Many US brokers now offer zero-commission stock trading, but options, futures, and international markets often carry per-trade or per-contract fees. Frequent traders should factor commission drag into their strategy.
What is the break-even price on a stock trade?
The break-even price = (Total Purchase Cost + Sell Commission) ÷ Number of Shares. With zero commissions, break-even equals your buy price. With $10 total commissions on 100 shares bought at $50, break-even is $50.10.