How to Calculate Gross Profit

Video Transcript

"OK so how do we calculate our gross profit? Generally when we're looking at your gross profit, you're going to look at first of all if you sold shares of stock or mutual fund, bonds, look at your final, the final amount that you made and look at the overall profit. Gross profit is really going to be that profit that doesn't take into consideration sometimes the fees that you spent on doing the trades. Maybe some other account fees that you're responsible for and also the taxes. You're not going to be taking into consideration the taxes that might be or might not be applicable to the account that you have. So when you're looking at gross profit, you're just looking at the raw addition you made so if you bought a thousand dollars worth of something and you came back and you made 1100 dollars at the end of the day, well that's great, your gross profit is going to be that 100 dollars. But that 100 dollars when you really start looking at your return on investment, really start looking at your net profit. You're going to have to subtract trading costs, fees, taxes, etcetera. So gross profit's a great thing to look at but it's really, that's your first point, that's just your raw increase in numbers for the day."