Showing posts with label transactions. Show all posts
Showing posts with label transactions. Show all posts
Monday, August 24, 2015
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.
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Thursday, August 13, 2015
How to Buy a Share of Apple Stock
Call your brokerage firm or log into your online brokerage account. Keep in mind that investing with a broker can be more expensive than performing the stock purchase on your own via an online account.
Search for the Apple, Inc. ticker (APPL) to see the most recent quote.
Calculate the number of shares you can afford to purchase and include the transactions fees that your brokerage firm will assess to complete the transaction.
Determine your brokerage account balance that can be applied to a stock purchase. If you do have the funds to cover the purchase price of the shares you want to buy, transfer the funds into your account. Follow your account's instructions for completing a fund transfer. Remember that funds may not always be available immediately.
Execute a stock purchase. To purchase using an online brokerage account, enter the ticker symbol of Apple, Inc. (APPL) and the number of shares you want to purchase.
Print out the stock purchase receipt for online accounts or have your broker send you confirmation of the purchase. Keep purchase confirmations with your financial records.
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