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How to calculate profits/losses from trading (without using margin)
There are various ways you might calculate profits & losses from buying and selling currency (without the use of margin):
##### Profit & loss calculation: transaction-to-transaction
• Cost basis = 5,000 USD (plus any trading fees)
Then you sell the 1 BTC for 40 ETH at a time when the price of ETH is 200 USD.
• Value of trade = 8,000 USD (40 x 200; and this is also your new cost-basis)
• Profit = 3,000 USD (8,000 - 5,000)
Then you sell the 40 ETH for 9,500 CAD at a time when the price of USD is 1.357 CAD.
• Value of trade = 7,000 USD (9,500 / 1.357)
• Cost basis = 8,000 USD
• Loss = 1,000 USD (7,000 - 8,000)
Your overall profit for the year is still 2,000 USD (3,000 profit - 1,000 loss).
##### Profit & loss calculation: start balances vs end balances
Alternatively, you may try comparing the value of all your balances at the start of the year versus the end of the year. But if you do this, you need to control for:
• Deposits
• Withdrawals
• Margin profits & losses
Note: this will give you a different overall profit & loss because you'll be using the exchange rates at the end of the year rather than at the time of each transaction.

### Example

Assuming the same history as in the previous example, at the start of the year your balances are:
• 5,000 USD