What is Trade Return?
This calculator separates gross price profit from percentage price return. It models linear USD-per-unit exposure without fees, spread, dividends, financing or taxes. It does not measure portfolio performance or the cash required to carry a short position.
Our free trade return calculator allows you to quickly calculate potential profits and losses before entering a trade, or to analyze the results of completed trades. By inputting entry price, exit price, position size, and trade direction, you can compare a stated price scenario. Actual account results also depend on costs, execution, financing and other positions.
How to Use the Trade Return Calculator
- Select Trade Direction: Choose whether you are going long (buying first, expecting price to rise) or short (selling first, expecting price to fall).
- Enter Entry Price: Input the price at which you entered or plan to enter the position.
- Enter Exit Price: Input the price at which you exited or plan to exit the position.
- Enter Position Size: Specify the number of actual shares or base units in your position. Do not enter futures or option contract counts without a separately modeled payoff.
- Set Risk Levels (Optional): Add stop loss and take profit levels to see risk-reward ratios.
Trade Return Formula
The basic trade return calculation differs for long and short positions:
Long Position: Return = ((Exit Price - Entry Price) / Entry Price) × 100
Short Position: Return = ((Entry Price - Exit Price) / Entry Price) × 100
Understanding Trade Direction
Long Positions (Buying)
A long position means you buy an asset expecting its price to increase over time. You profit when the selling price is higher than your purchase price. This is the most common approach for investors building wealth over the long term.
Short Positions (Selling)
A short position involves borrowing an asset, selling it at the current price, and hoping to buy it back at a lower price to return to the lender. Short sellers profit when the price drops. This strategy carries higher risk since prices can theoretically rise indefinitely while short positions have limited upside.
Risk Management with Trade Returns
Stop and target scenarios show gross dollar changes at the specified prices. A long stop belongs below entry and a short stop above entry. A gap can produce a worse execution price, so the displayed stop amount is not a guaranteed loss limit.
A displayed 1:2 ratio means planned reward is twice the entry-to-stop distance. It does not establish positive expectancy: hit probabilities, realized exits and costs also matter. There is no universally profitable ratio.
Frequently Asked Questions
What return does this calculator measure?
It measures gross USD price P&L for linear share or base-unit positions. Percentage return uses entry price as the denominator; it is not a return on margin or total account equity. Fees, spread, financing, borrow costs, dividends and taxes are excluded.
How is dollar P&L calculated?
For a long position, gross P&L = (exit − entry) × units. For a short position, gross P&L = (entry − exit) × units. Divide that directional price change by entry price and multiply by 100 for the displayed percentage. Multiplying percentage return alone by unit count does not produce dollar P&L.
Does position size include leverage?
Enter the actual total shares or base units of exposure. Do not multiply an already leveraged position by leverage again. This tool does not calculate margin requirements, liquidation, return on posted collateral, option payoffs, or futures contract multipliers.
How are stop and target scenarios interpreted?
For a long position the stop must be below entry and the target above; for a short position the reverse applies. The amounts assume an exit exactly at those levels. A stop trigger does not guarantee that fill price, and the reward/risk ratio does not estimate hit probabilities.
Can I size a position from a desired profit?
Given an assumed favorable move of 5 dollars per unit, 100 units would produce 500 dollars gross profit. This arithmetic does not make that move occur or establish an appropriate risk budget. Entry-to-stop distance, costs and possible gaps must be assessed separately.