Do you use a stock calculator? Investing in the stock market can be a very lucrative venture…if you know what you’re doing. You could have $1000, $10,000 or $100,000, but if you don’t have a clue how to value a stock or calculate the intrinsic value of a company, you might as well give your money away right now.
If you think this is too complicated, I can’t be bothered, I should go back to watching Netflix, then this article is for you. Luckily there’s a solution, and it’s in the form of a stock calculator. If you are looking for a options calculator check interactive brokers calculator.
Table of Contents
Why a Stock Calculator Is Important
- A stock calculator is important for letting you know if your trade is a good one.
- Calculators are great for calculating investments.
- You can you calculate future value of an investment.
- Calculators tell you how much you’ve earned in a trade.
- It can also tell you how much you’ve lost on a trade.
However, if we make a few underlying assumptions, we can determine what a stock should be trading at in the future, also known as its intrinsic value.
A stock calculator can help you understand several things, including the valuation of a stock or a potential acquisition price of a company. For those of you who trade stocks, a stock calculator will tell you how much you earned or lost from your investments.
Better yet, you can calculate your return on investment as well as your break-even share price. Narrowed down further, a stock calculator will help you flush out undervalued stocks and an appropriate return for the risk you are taking on.
How to Use It to Value a Company
As mentioned earlier, a stock calculator proves to be an invaluable tool during the business acquisition planning phase.
Many business’ want to know the “theoretical” value of a company before they purchase. The concept is the same in other aspects of life, such as when we send an appraiser in to appraise a piece of real estate. We don’t want to overpay for something that looks nice on the outside but a disaster inside. Our trading service wants our members to have the best information possible.
That includes investing as well as stock market trading.
Forecasting the Market
Stock calculators are also important in forecasting the movement of the market in the future. For those of you who invest, you would know we invest based on predictions, among other things.
When we invest, we aim to profit from changes in price. Thus, we target undervalued stocks (based on theoretical values from our calculator) and buy them with the hopes they rise in price.
We then unload them when we feel they are overvalued. Make sure to check out our live trading room to see this in action.
Dividend Reinvestment Stock Calculator
For those of you who participate in dividend investing, a stock return calculator automatically factors and calculates dividend reinvestment (DRIP).
Additionally, you can simulate daily, weekly, monthly, or annual periodic investments into any stock and see your total estimated portfolio value on every date. Translation: you can see how wealthy you will be in the future.
The bottom line is you should pick the calculator that solves the problems you will face while factoring in cost and ease-of-use too.
How Do You Calculate How Much You Make on a Stock?
- Do you want to know how to calculate how much you make on a stock?
- Multiply the sale price per share by the number of shares sold.
- This finds your total proceeds from the trade.
- Subtract the cost basis from the total proceeds.
- This calculates how much you make on a stock.
How Does a Basic Stock Calculator Work?
For those of you using a stock calculator to calculate your profit and loss, it is straightforward to use. All you need to do is follow these five easy steps:
- Enter the total number of shares you bought
- Enter the purchase/selling price per share
- Add in the commission fees for buying and selling said stocks
- Where applicable, specify the Capital Gain Tax and then choose the currency from the drop-down list
- Click ‘Calculate’ to see the profit/loss.
The Basic Calculation Formula
Profit (P) = ((SP * NS) – SC) – ((BP * NS) + BC)
- NS equals the number of shares,
- SC is the selling commission for the transaction,
- BP is the buying price for each share,
- SP is the selling price for each share, and
- BC represents the buying commission.
All things considered, it’s a pretty straightforward formula. Once you take out commission, it’s easy to determine your profit on the spread. It’s basic, yes.
You can use a simple stock calculator to find out the value of the stock and to make an informed decision to buy or sell the stock. Simple as that.
A stock calculator is as vital to the trader and investor as the oxygen tank is to the diver. It is a tool that can help you make smarter decisions about investing your money without drowning in the sea of information.