One of the most unpredictable and volatile financial marketplaces in the world is the cryptocurrency market.
When trading your cryptocurrencies in the midst of all this volatility, keeping track of your trading earnings is crucial. The reason is pretty simple, you might think you are making money while you don’t know that your crypto portfolio is bleeding.
When the market is bullish, there is a larger probability of generating a profit, and in a bearish market is when there is a constant decrease in the market, both profit and loss are represented. So crypto trading profit is simply when you make more money than your original entry price while trading crypto. In contrast, a crypto trading loss is when the price of your crypto goes lower than its original price point.
Taking note of the profits you have made and the losses you have taken also helps you create a more formidable strategy to make a consistent trading profit. This comprehensive guide will teach you how to calculate your profit while trading and the importance of doing so.
Ways To Calculate Your Crypto Trading Profit And Loss
1. Trading Spreadsheet
Using a spreadsheet provides a solution for tracking profit while trading crypto, although it requires some knowledge of spreadsheet applications.
You can track your crypto trading profit using Google Sheets or Microsoft Excel. All you have to do while carrying out this task is to input the price at which you bought a cryptocurrency, the current market price, and the number of coins. Doing this will help you know if you are running at a profit or loss at the current market price.
2. Crypto Profit Calculator
This is one of the most advanced yet effective ways of calculating your profit while trading crypto. It does not matter if you are day trading crypto or carrying out any other form of trade; you can use it to calculate profit for any kind of trade.
An excellent example is the Crypto Profit Calculator, which helps crypto trader to determine their returns, margins, profit, and loss. Before choosing any crypto profit calculator, it is recommended that you carry out your research to select a crypto profit calculator that suits you.
3. Unrealized Profits
When trading crypto, you should constantly check the amount you are set to gain and the amount you are set to lose. However, you might not have time to leave the market and use a spreadsheet to calculate your profit as you are trading crypto.
So the best way to track your crypto profit in a situation like this is by using what is called “unrealized profit”.
Let’s say you bought a Solana for a price of $400, and as you are trading, the price rises to $700, you would have made $300. But since you have not withdrawn the crypto from the market or converted it to a stablecoin, it is not yet considered a profit. The same thing applies when you are losing; it is not yet classified as a loss because you have not yet closed trading.
However, it is important to note that when you are trading crypto, it is very important that you stop yourself from panic buying because of FOMO (fear of missing out). Additionally, have your crypto trading strategies ready, don’t go into the market unprepared or without guidance and don’t expect all coins to perform very well.
Conclusively, learning how to track your profit while trading crypto will help you curtail market volatility’s effects and using a crypto profit calculator, a spreadsheet, and an unrealized profit can successfully help you with that.
