3 Reasons You Should Use a Stock Profit Calculator
If you don’t have a stock profit calculator at the ready then you are missing out on understanding the trade you are about to take. In order to be a successful stock trader you need rules, tools and money. Sounds simple right? It’s not but you can make your life simpler if you have a stock profit calculator. Let me explain.
What is a Stock Profit Calculator?
A stock profit calculator is simply a calculating tool that allows you to determine your profit and loss of your investment by providing the amount of shares, commission and capital being used.
Do I Really Need to Use a Stock Profit Calculator?
The short answer is you don’t need to do anything you don’t want to do but you will be selling yourself short by not determining the profit and loss of any trade you are going to take before taking it. There are 3 really important reasons why I highly recommend you use a stock profit calculator before placing a trade.
# 1 – Determine the Capital Needed to Place the Trade
Before placing a trade you should always know how much capital you will need to place the trade. In fact, you can refine the amount of shares you can use to trade a stock by providing the amount of capital you have available to trade. There is no sense in trying to trade 1000 shares of Apple (AAPL) if you only have $10,000 available trading capital. However, by knowing that you have $10,000 to trade you can quickly determine that you can trade 59 shares of AAPL and not a share more on December 6th, 2017.
# 2 – Know Your Profit
Once you have set your plan for trading a stock you can plug in the numbers to determine if it’s worth trading the stock you are thinking about trading. All traders must take on risk but if your reward isn’t worth the risk then you might not want to take the trade. Having a stock profit calculator at your fingertips allows you to know your risk to reward ratio immediately.
# 3 – Know Your Loss
Every time you place a trade you are going to have to think about the potential financial loss you might have if your plan doesn’t pan out. Losing money as a stock trader is guaranteed but you can pre determine the financial loss and use that number as a guide for your trading plan. If you reach that loss due to being wrong then you won’t feel as bad because you used your trusty stock profit calculator before taking the trade.
Every stock trader should look at themselves as a business. If you don’t see yourself as a business then you are not giving yourself the opportunity to being consistently profitable. If you know your profit or loss on any given stock before placing the trade then you are controlling your financial situation like any CEO or company must do. A stock profit calculator can help guide you to making the right trading choices by taking the guess work out.