How to Calculate Profit and Loss for trading position?
"Month to date For the month to date (MTD), the price on Feb 28th is $4.58 and the price on March 16th is $4.61 so the return is which can be written more simply as The position is 1000 shares valued at $4580 on Feb 28th, so the profit on the month to date is Calendar year to date For the calendar year to date (YTD), the price on Dec 31st is $4.60 and the price on Feb 28th is $4.58 so the return to Feb 28th is The return from Feb 28th to March 16th is 0.655022 % so the year to date return is or more directly So the 2011 YTD profit on 1000 shares valued at $4600 on Dec 31st is Year to date starting Dec 10th For the year to date starting Dec 10th, the starting value is and the value on Dec 31st is 1000 * $4.60 = $4600 so the return is $4600 / $4510 - 1 = 0.0199557 = 1.99557 % The year to date profit is therefore Note - YTD is often understood to mean calendar year to date.  To cover all the bases state both, ie ""calendar YTD (2011)"" and ""YTD starting Dec 10th 2010"". Edit further to comment For the calendar year to date, with 200 shares sold on Jan 10th with the share price at $4.58, the return from Dec 31st to Jan 10th is The return from Jan 10th to Feb 28th is The return from Feb 28th to March 16th is The profit on 1000 shares from Dec 31st to Jan 10th is $4600 * -0.00434783 = -$20 The profit on 800 shares from Jan 10th to Feb 28th is zero. The profit on 800 shares from Feb 28th to March 16th is So the year to date profit is $4."
What the automation mostly does is make short-term trading that much more difficult. Day trading is a zero-sum game, so if they win more, everyone else wins less.  Long term trading (years to decades) is a positive-sum game; the market as a whole tends to move upward for fairly obvious reasons (at its basis it's still investing, which in turn is based on lending, and as long as folks make fairly rational decisions about how much return they demand for their investment and the companies are mostly producing profits there will be a share of the profit coming back to the investors as dividends or increased share value or both. Day-to-day churn in individual stocks gets averaged out by diversification and time, and by the assumption that if you've waited that long you can wait a bit longer if necessary for jitters to settle out. Time periods between those will partake of some mix of the two. Here's a simple example for a put, from both sides. Assume XYZ stock trades at $200 right now.  Let's say John writes a $190 out of the money put on XYZ stock and sells this put to Abby for the premium, which is say $5. Assume the strike date, or date of settlement, is 6 months from now.  Thus Abby is long one put option and John is short one put option (the writer of the option is short the option). On settlement date, let's assume two different scenarios: (1) If the price of the stock decreases by $50, then the put that Abby bought is 'in the money'. Abby's profit can be calculated as being strike price 190 - current stock price 150 - premium paid 5 = $35 So not including any transaction fees, that is a $35 dollar return on a $5 investment. (2) If the price of the stock increases by $50, then the put that Abby bought is worthless and her loss was 100%, or her entire $5 premium.  For John, he made $5 in 6 months (in reality you need collateral and good credit to be able to write sizable option positions). It depends to some extent on how you interpret the situation, so I think this is the general idea. Say you purchase one share at $50, and soon after, the price moves up, say, to $55. You now have an unrealized profit of $5. Now, you can either sell and realize that profit, or hold on to the position, expecting a further price appreciation. In either case, you will consider the price change from this traded price, which is $55, and not the price you actually bought at. Hence, if the price fell to $52 in the next trade, you have a loss of $3 on your previous profit of $5. This (even though your net P&L is calculated from the initial purchase price of $50), allows you to think in terms of your positions at the latest known prices. This is similar to a Markov process, in the sense that it doesn't matter which route the stock price (and your position's P&L) took to get to the current point; your decision should be based on the current/latest price level. Think of options as insurance. An insurance company makes money by selling the policies at a rate slightly higher than the average payout.  Most options expire worthless. This is because most options are purchased by hedge funds. To 'hedge' means taking out insurance in case your position goes against you. So the sellers of options obtain a price that covers their (averaged) losses plus provides them with a profit for their trouble.  An option has an amount that it declines in value each day (called theta). At the expiration date the option is worth zero (if it is out-of-the-money). So it is option writers that, typically, make money in the options market (as they are the sellers of insurance). If they didn't make money selling options they would not sell them.  For example, the February call option on SPY strike 200 traded at 8.81 on 12/30. Since then it has crumbled in value to 0.14. The option writer currently stands to make a huge profit.  So, just as with insurance, you (generally) never make money by buying insurance. But the sellers of insurance tend to make money as do the writers of options.  Edit: Theta @ Investopedia "Finding statistics is exceedingly hard, because the majority of traders lose money. That is, not only they don't ""beat the markets"", not only they don't ""beat the benchmark"" (S&P 500 being used a lot as reference): they just lose money. Finding exact numbers, quality statistics and so on is very difficult. Finding recent ones, is almost impossible. With enormous effort I have found two references that might help make an idea. One is very recent, Forex ""centered"" and has been prepared by a large finance group for the the Europen Central Bank (ECB). It's available on their website, at an obscure download location. The document is stated to be confidential, but its download location has been disclosed to the public by CNBC. I can't post CNBC's link because I have just joined this Stack Exchange portal so I don't have enough reputation. You can find it by looking for their article about FXCM Forex broker debacle due to the Swiss Central Bank removing the EUR/CHF peg at 1.20. The second is a 2009-ish paper about Taiwanese retail traders profitability statistics published by Oxford University Press and talks about stocks. Both documents focus on retail traders. I strongly suggest you to immediately save those documents because they tend to disappear after a while. We had a fantastic and complete statistics report made by a group of German Banks in 2011... they pulled it off in 2012." "The two dimensions are to open the trade (creating a position) and to buy or sell (becoming long or short the option). If you already own an option, you bought it to open and then you would sell it to close. If you don't own an option, you can either buy it to open, or sell it (short it) to open. If you are already short an option, you can buy it back to close. If you sell to open covered, the point is you're creating a ""covered call"" which means you own the stock, and then sell a call. Since you own the stock, the covered call has a lot of the risk of loss removed, though it also subtracts much of the reward possible from your stock." "Selling short is simply by definition the selling, then later re-buying of stock you don't initially own. Say you tally your entire portfolio balance: the quantity of each stock you own, and your cash assets. Let's call this your ""initial position"". We define ""profit"" as any increase in assets, relative to this initial position. If you know a particular stock will go down, you can realize a profit by selling some of that stock, waiting for the price to go down, then buying it back. In the end you will have returned to your initial position, except you will have more cash. If you sell 10 shares of a stock valued at £1.50, then buy them back at £1.00, you will make a £5.00 profit while having otherwise returned to your previous position. If you do the same, but you initially owned 1000 shares, sold just 10 of those, then bought 10 back, that's still a profit of £5.00. Selling short is doing the same thing, but with an initial and ending balance of 0 shares. If you initially own 0 shares, sell 10, then buy 10 back, you return to your initial position (0 shares) plus a profit of £5.00. (And in practice you must also pay a borrowing fee to do this.) The advantage of selling short is it can be done with any stock, not just those currently owned." Let's consider that transaction cost is 0(zero) for calculation. In the scenario you have stated, maximum profit that could be made is 55$, however risk is unlimited. Hedging can also be used to limit your losses, let's consider this scenario. Stock ABC trading @ 100$, I'll buy the stock ABC @ 100$ and buy a put option of ABC @ strike price 90$ for a premium of 5$ with an expiration date of 1 month. Possible outcomes I end up in a loss in 3 out of 4 scenarios, however my loss is limited to 15$, whereas profit is unlimited.