What is a Profit?
The formula for profit is revenue minus expenses. But what does profit mean when you are trading stocks?
When you buy a stock, the price you paid for it is your expense. When you sell a stock, the price you received for it is your revenue. When your revenue is greater than your expense, you make a profit! If you sell a stock at a lower price than where you bought it, your revenue will be lower than your expense so you will have a loss!
In stock trading, the profit is the money you make when you buy and sell a stock. So remember the old saying, “Buy Low and Sell High!”
And don’t forget, you will have to pay taxes on your profit!
Have fun trading stocks by playing Trading Day, our free stock market game.