Crypto is the new kid in the town. The tech geeks get mesmerized when they know how the fortunes turn in a single day thanks to crypto trading. You may also get the chance of becoming a billionaire overnight without putting in any extra effort. On the flip side, crypto also has its lethal potential to make you penniless.
All in all, crypto trading is not as straightforward as it seems from the face value. It is the extreme mastery of numbers. A wrong baby step may give you a headlong plunge into the abyss. Hence, the novice crypto trader must be fully aware of the profit and loss streaks.
This blog is dedicated to giving you a clear idea about the profit and losses you reap or incur during crypto trading. There are some specific strategies to calculate your figures. We will list all, and you may pick what suits you.
The strategies will groom you well to be an unparalleled master of the crypto genre. Stay with us to learn one of the darkest secrets of crypto trading.
A Golden Advice:
Before plunging into the main body of the content, it is good to mention that every day thousands of crypto traders go empty-handed. Their hard-earned money goes down the drain. The crypto world is not only a milch cow but also a cruel alligator, ready to gulp down your virtual coins.
Often, the losses are incurred when the crypto trader is unaware of its financial situation, trades blindly, and at the dusk of a trading session, finds itself before a dead alley.
A rule of thumb is to trade cautiously and calculate every profit and loss beforehand. Without knowing your actual numbers, you would be just lurking in the dark without any substantial prospect.
There are multiple strategies to calculate crypto trading profits and losses. We will individually describe all of them for your better understanding. At the end of the day, you would be competent enough to differentiate the best for you. Not every strategy works on all, and not all strategies work on one. Be synchronized!
This is the most simple way of calculating crypto profits and losses. What you have to do is to minus the price you sold crypto-coins for from the amount you bought these for.
Let’s quote a real-life example of Bitcoin (BTC), you buy a Bitcoin for $10,000, and during its heyday, you sell it for $15,000.
Now, you need to remove the original price from the selling price. You get it removed (15,000 – 10,000) and the eye-popping figure of $5,000 is before you. You are as happy as a sandboy.
The same model can be used to calculate the losses, suppose you bought the same Bitcoin (BTC) for $10,000, but its value plunged to $5,000. You are wary that the price may further go down, and sell the Bitcoin immediately. In the same vein, apply this simple strategy, and you will get a deficit of 5,000 after the back of the envelope calculations.
Trading is volatile in crypto, and the chances of losing the money increase manifold when you do extreme crypto trading. A sharp eye on the market volatility is a must-have in this regard. The virtual ups and downs also translate into profits and losses. Nonetheless, obsession with the minute details blinkers the future trader about the actual market value.
For clear understanding consider an example, you buy Ethereum (ETH) for $2,000. Now consider market vibes, if Ethereum (ETH) hits $5,000; you earn $3,000. While the value may go down, and the same should be inscribed in your ledger.
The only thing that differentiates the second strategy from the first one is that the latter does not provide you with the tangible sensations of profit.
Conversely, the value of Ethereum (ETH) can tank before your final calculation. This happens when the buying streak is more powerful.
As these pre-share loss and profit calculations are murky, you need to evaluate every market parted with due caution. It is advised to set aside daily dedicated time to assess the direction of your trading vessel.
To get a better understanding of your profit and loss streaks, rely on the percentage points. Below is the complete detail, how you fetch the profits in percentage data points. What you need to do is simply multiply.
Just multiply the purchasing price with corresponding data points. The percentage expressions would be like this:
1.1 for 10%
1.2 for 20%
1.3 for 30%
1.4 for 40%
1.5 for 50%
And so on!
Now suppose that you have bought Cardano (ADA) at the basic price of $2. Now, you want to make a profit of 10%. To grab this 10% profit margin, you need to multiply the entry price (basic price) by the supposed profit of 10%. That would be like this, $2% (purchasing rate) multiplied by (x) 1.1 (10%).
Finally, the calculations at hand are a bit like this – $2.2. Here, $2 is capital while $0.2 is the actual profit you have made so far.
To make these tricky calculations more understandable, let’s quote another illustration. If you eye a profit of 50%. The profit calculations could be 2 × 2 = 4. Then, remove the original capital of $2. You are left with $2 or the remainder of 50% profit.
Another trick to remember the percentage points streak is to add in the number “1” every time you multiply by a hundred. The results would be amazing!
Crypto profit and losses should be noted using a spreadsheet. The spreadsheet is a magical organizational tool that provides you ample space to organize your data. The data points can be categorized into different sections such as;
- Brand of the coins.
- Trading points.
- Buying amount.
- Trading amount.
- Date-wise ledger.
Once you make these segments, you get a clear understanding of the buying and selling streaks as well as your archive for crypto trading. Moreover, you get familiar with the market spikes and patterns. This way, you start comprehending the crypto world in a better way.
Not every crypto trader is good in office automation; if you are one of those, leave that spreadsheet option, and move on to the cryptocurrency calculators. Calculators help crunch the complicated numbers in a jiffy. Moreover, calculators are also helpful in executing error-free calculations.
There are many online cryptocurrency calculators available in the market and are just a single tap away from you. Browse a bit and fetch the best one! Crypto trading is no banaler.
You cannot earn an iota of money from the crypto world if you are not adept at the right calculations. Right calculations are the key to the right profit schemes. If you have a flare of calculation, and you can apply any of the abovementioned strategies; no worldly force can stop your inexorable progress towards prosperity. Stay oriented, and cut above the rest! The crypto world is awaiting you.