How to Calculate Stock Trade Profit (6 Steps)

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.

How to Calculate Treasury Stock Transactions

Determine the number of shares and the price per share at which your company repurchased its stock. For example, assume your company repurchased 500 shares of stock at $5 per share.
Multiply the number of shares by the price per share to calculate the repurchase cost. For example, multiply 500 by $5, which equals $2,500.
Increase your treasury stock account and reduce your cash account in your accounting records by the amount of the repurchase cost. For example, increase your treasury stock account by $2,500, and reduce your cash account balance by $2,500.



Multiply the number of shares of treasury stock you resold by the price per share at which you resold them. Then increase your cash account by that amount in your accounting records. For example, if you resold 250 shares for $6 per share, multiply 250 by $6, which equals $1,500. Then increase your cash account by $1,500.
Multiply the number of shares you resold by the price per share at which you initially repurchased them. Then reduce your treasury stock account by that amount in your accounting records. For example, if you initially repurchased the 250 shares for $5 per share, multiply 250 by $5, which equals $1,250. Then decrease your treasury stock account by $1,250.
Subtract the amount for which you initially repurchased the shares from the amount you received from reselling them to determine your profit. Then increase your paid-in-capital from treasury stock account by that amount. For example, subtract $1,250 from $1,500, which equals $250. Then increase your paid-in-capital account by $250.



Multiply the number of shares of treasury stock you resold by the price per share at which you resold them that is lower than the initial repurchase price. Then increase your cash account balance by that amount. For example, if you resold 250 shares for $4 per share, multiply 250 by $4, which equals $1,000. Then increase your cash account balance by $1,000.
Multiply the number of shares you resold by the price per share at which you initially repurchased them. Then decrease your treasury stock account balance by that amount in your accounting records. For example, if you initially repurchased the 250 shares for $5 per share, multiply 250 by $5, which equals $1,250. Then decrease your treasury stock account balance by $1,250.
Subtract the amount for which you resold the shares from the amount for which you originally repurchased them to determine your loss. Then decrease your paid-in-capital from treasury stock account by that amount. For example, subtract $1,000 from $1,250, which equals a $250 loss. Then decrease your paid-in-capital account by $250.

How to Calculate Net Income Based on Stock Price

Visit any financial website that gives stock information and find a company’s P/E ratio, price per share and number of shares outstanding, which is information that a financial website provides for all public companies. For example, assume a company’s P/E ratio is 12, its price per share is $20 and it has 1 million shares outstanding.
Substitute the values into the P/E ratio formula: P/E ratio = price per share/(net income/shares outstanding). In this example, substitute the values to get 12 = $20/(net income/1 million).
Multiply both sides of the equation by the right side’s denominator. In this example, multiply both sides by (net income/1 million) to get 12 x (net income/1 million) = $20.
Divide the company’s P/E ratio by its total shares outstanding. In this example, divide 12 by 1 million to get 0.000012. This leaves 0.000012 x net income = $20.
Divide the company’s stock price per share by your result to calculate its net income over the past 12 months. In this example, divide $20 by 0.000012 to get approximately $1.7 million in net income over the past 12 months.

How to Calculate the Expected Rate of Return for Preferred Stock

Determine the dividend on the preferred stock. Preferred stock generally pays a fixed dividend, so you will know how much the stock is going to pay the stock owner each year. For example, assume the dividend of the preferred stock is $12 per share annually. If the dividend is paid quarterly, you will need to multiply it by 4 to get the annual dividend.
Determine the selling price of the preferred stock. Businesses will have to deal with flotation costs in calculating a stock price, but an individual investor can simply look at the price that the stock is being offered for. For example, assume preferred stock in company ABC is being offered at $200 a share.
Divide the expected dividend per share by the price per share of the preferred stock. With our example, this would be $12/$200 or .06. Multiply this answer by 100 to get the percentage rate of return on your investment. In our example, .06 x 100 = 6 so the rate of return for the preferred stock is 6 percent per year.

How to Find the Average Price of Common Stock

Determine the purchase prices for the common stock and the quantity of stock purchased at particular prices. For example, assume you purchased 1,000 shares of stock in Company A at $5 per share, 1,500 shares at $4 per share and 2,500 shares at $10 per share.
Multiply the purchase prices by the quantity purchased and add. Continuing the example, (1,000 x $5) + (1,500 x $4) + (2,500 x $10) = $5,000 + $6,000 + $25,000 = $36,000
Add the total number of shares purchased. Continuing the example, 1,000 + 1,500 + 2,500 = 5,000 shares.
Divide the total cost of the shares by the total number of shares: $36,000/5,000 = $7.20. This is the average price of the common stock.