# How to Calculate Stock Trade Profit

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There are several ways to purchase stock. You can purchase directly from the company through the investor relations department, through a third-party direct stock purchase or through a broker. Once you purchase your stock and sell it, you may want to figure out how much profit you made on the sale after all transaction fees and commission costs. The answer depends on the method you use to buy and sell the stock.

Review the components of a stock trade (a sell or buy). A complete stock trade (opened and closed order) would be buying a share of stock and then selling it at a new price. The profit depends on the difference between what you paid and the price you sell the stock for, as well as the sales commission/transactions costs, if any.

Work through an example. Let's assume you buy a stock for \$100 and sell it for \$200. The profit on the sale is \$100, but this assumes there were no commissions or transactions costs associated with the sale.

On the confirmation sheet sent to you by the broker, look up the compensation associated with the order to both buy and sell. The compensation may also be called a "mark-up" or "mark-down." This is clearly stated on your trade order form if you use a broker. Discount brokers can charge as little as \$5 per trade, but full-service brokers can charge as much as \$100. Remember that a stock trade consists of two orders: a purchase and a sell. In the trade example from Step 2, the profit after using a full-service broker who charges \$100 would be -\$100.

Do the calculation for a stock trade profit for a discount broker. The calculation is: (\$200 - \$100) (change in stock price) - \$10 (commission from purchase and sale) = \$90.

Calculate the stock trade profit for a direct purchase program. Let's assume one company has a program where you can purchase shares directly from the company. Ongoing fees include a one-time \$8 setup fee, a \$2 fee each time you add money to your account from your bank account and a 5 cents per share commission. There's also a \$5 fee when you sell stock.

Do the calculation. Using the same information from Step 1, the calculation is: (\$200 - \$100) (change in stock price) - \$8 (one-time set up fee) - \$2 (for funding the account from your bank account) - \$5 (sale of stock) - 10 cents (commission from purchase and sale) = \$84.90.

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