Whether you're a professional trader or a total newbie in the stock market, this stock calculator will surely come in handy. Basing on the purchase stock price and selling price, it determines the stock return - or, in plain terms, how much money you will earn on your transactions. This stock profit calculator will also provide you with two important parameters: the return on investment (ROI) and the break-even price.

If you're interested in stock investment and trading, make sure to check out the earnings per share calculator, too!

# What are stocks?

By definition, stocks are certificates that entitle you to partial ownership of a given company. For example, if a company issues 100 shares of stock outstanding and you would buy five shares, you would be entitled to 5% of the company's assets and earnings.

Unlike bonds, stocks make you an "owner" of the company. There are two main types of stocks: common, which give you the voting right at shareholders' meetings, and preferred stocks. The latter type doesn't allow you to vote, but typically brings a higher share in the assets.

# How is the stock price determined?

When a company enters the market, it undergoes valuation during an initial public offering (IPO). After this event, the total value of the company is determined. Dividing this total value by the number of issued stocks gives you a price of a single share.

Once the company is out on the stock market, though, the stock prices fluctuate according to the principles of supply and demand. For example, if the demand skyrockets, the prices will probably increase drastically, too!

# How to calculate the stock profit?

The main idea behind this stock return calculator is that you buy stocks when they are cheap, and sell them once their value increases. The profit is the difference between the expenses and revenue. You can calculate it according to the following formula:

`Profit = [(SP * No) - SC] - [(BP * No) + BC]`

where:

• SP stands for selling stock price,
• No is the number of stocks you trade,
• SC is the selling commission that you have to pay,
• BP is the buying stock price, and
• BC is the buying commission.

This stock investment calculator accepts commissions expressed both as fixed monetary values and as a percentage of the price. Once you type in one of these two values, the other one will be calculated automatically.

# Is stock investment a good idea?

Now that you know your stock profit, you already have an idea of how much sense it makes to invest in stocks. However, there are some indicators that you can calculate to check the profitability of such an investment.

One of these indicators is ROI - return on investment. It tells you what percentage of the initial investment will return to you in the form of profit. You can calculate it with the formula below:

`ROI = Profit / [(BP * No) + BC]`

ROI is expressed as a percentage. For example, an ROI of 100% means that if you spend a certain sum on stocks, your revenue will be two times higher than that sum.

# When should I sell my stocks?

Last but not least, this stock price calculator gives you a clear indication of when you should refrain from selling your stocks. If the price is lower than the break even price, every selling transaction will only bring you losses. That's why it's essential to sell your stocks only if the price exceeds this value.

To calculate the break even price, use the equation below:

`Break even =[(BP * No) + BC] / [No * (1 - SC%)]`

where SC% is the selling commission expressed as a percentage of the selling price.