How To Calculate Crypto Profits: A Complete Guide

If you have not heard about cryptocurrency, then it is certain that you live under a rock.

Investing in Crypto can yield significant profits, and you must calculate your crypto profits frequently and efficiently. If you want to know how to calculate crypto profits, read this article to find out how.

Before you learn how to calculate crypto profits, let’s go into how you can typically make a profit from your crypto investments:

Day Trading

Day trading in cryptocurrencies can be a very profitable way to gain money. To accurately predict whether a cryptocurrency will gain or decline in value, you’ll need to be familiar with a price analysis. Trading crypto all day long is possible if this is your skill set.

Day trading in crypto is all about reaping the benefits of short-term price movements. A day is the maximum length of time that most professional traders in this marketplace will remain in the same position.

Therefore, it is essential to open many trades during the day to make small but steady gains.

A reputable crypto exchange that supports a wide range of markets at minimal costs is essential for day trading in cryptocurrencies.

You will find it difficult to justify the cost of day trading cryptocurrency on an exchange with hefty fees in terms of the former. And besides, charges will chip away at your profits.

Investing

This involved buying and retaining crypto assets for some time before selling them.

For the most part, cryptocurrency assets are ideal for long-term investment. Despite their short-term volatility, they provide significant long-term growth potential.

The investment approach demands you to find more reliable cryptocurrencies that will not vanish into thin air.

Investing in cryptocurrencies like Bitcoin and Ethereum, which have shown long-term price increases, can be mainly considered secure.

Staking and loaning

Staking is a method of ensuring the validity of cryptocurrency transactions. Stakers own coins but do not use them since they are stakeholders. Instead, a cryptocurrency wallet is used to keep all of your coins safe.

To verify transactions, a Proof of Stake network employs the coin to verify transactions.

The compensation you earn is comparable to the interests you will get from a bank on a credit balance you maintain.

Proof of Stake selects transaction validators depending on the number of coins you have pledged to stake. Eliminating the need for specialized hardware is more environmentally friendly than cryptocurrency mining and doesn’t cost as much either.

Another option is to lend your cryptocurrency to other traders and earn interest on your borrowed money. There are several platforms available that support trading.

Invest in new Coins that have the potential to make a difference

You can profit with crypto by investing and purchasing the best altcoins soon after their release.

Many people regretted not investing in Bitcoin when it was initially created. If you had purchased it in 2009, you would have spent just a cent on buying it.

Ethereum as well as being sold at $0.75 per token when it was released in 2015.

The value of both these cryptocurrencies has increased tremendously.

If you can buy new altcoins with great potential before their values increase, you’ll make money.

How to calculate crypto profits

Understanding the figures is the key to calculating your cryptocurrency trading profit. The most important thing to remember while trading crypto is that your primary purpose is to make money.

Keeping track of your profits helps you keep your portfolio in balance. However, how do you perform these calculations?

Subtract the sale price from the original purchase price to arrive at the profit

When calculating profit and loss, subtract the price of the coin you sold from the price you paid for it. For example, if you purchased Bitcoin for $200 and sold it for $300, you made a profit of $100. You can figure out how much profit you’ve made by deducting $200, the price you paid, from $300.

Make use of a cryptocurrency profit calculator

Other ways to calculate profits may be too time-consuming and complicated. Calculate your cryptocurrency profit by using a cryptocurrency profit calculator.

These resources can be found on the internet. A CoinStats profit calculator is an excellent tool for calculating cryptocurrency profits.

Employ unrealized profits

There are times when investors wish to cash out on their winnings and get out of a volatile market like the cryptocurrency one.

Traders can determine the profitability of their trades by continuously watching the market.

Focusing on market volatility can impair a trader’s ability to see the big picture.

Be aware of market movements, such as the price of a cryptocurrency such as bitcoin.

For instance, if you buy Ethereum for $1000 and the value of your cryptocurrency grows to $1500, you’ll instantly make a profit of $500 without ever selling or exchanging any of your Cryptocurrencies.

Calculate profits using a  spreadsheet

For for-profit calculations, a spreadsheet is a top choice. Formulas can be used in a spreadsheet to keep track of profit and loss.

These columns can be used to divide your spreadsheet into sections:

  • Which cryptocurrency did you purchase?
  • What quantity of cryptocurrency do you want?
  • Price of the coins at which you purchased the crypto
  • Do you remember the price at which you sold your crypto assets?
  • The day on which you traded your crypto.

To do this, you can utilize Google Sheets, which can pull in real-time data from the crypto market. Thus, you’ll be able to see if you’ve made any money.

Calculating the percentage profit margin by multiplication

A more significant number of cryptocurrency traders prefer percentage-based profit and loss calculations.

You may figure out your crypto earnings by multiplying them by the appreciation in the prices of your cryptocurrency.

Calculate your profit by multiplying the price you purchased your cryptocurrency by the appropriate percentage expression.

What are the benefits of keeping track of your cryptocurrency profits?

As an investor in cryptocurrencies, knowing how much money you have made is vital. The problem is that many traders don’t even attempt to calculate their profit, regardless of how critical it is.

Your cryptocurrency purchases and sales will not be successful if you don’t know how much money you’ll be making. If you want to be a successful trader, you must constantly perform these calculations.

Supply and demand govern the crypto market. Value decreases when demand for cryptocurrency is low and rises when demand is high or unusual.

If you want to take advantage of decreasing pricing, you need to keep an eye on price changes and investment patterns.

When cryptocurrencies’ values are low, it makes sense to buy them. When you decide to sell your cryptocurrency, you may use the price you purchased it to evaluate whether or not you made a profit.

If you sell your cryptocurrency for more than you paid for it, you’ll profit; if you sell it for less.

Conclusion

Everyone goes into cryptocurrency intending to make profits.  One of the most challenging tasks for traders is determining their net profit.

You’ll know how to calculate and get excellent outcomes if you just follow the tips above to learn how to calculate your profits.