Can anyone help me (mathematicians) calculate and understand how buying and selling stock effects the profit, i'll explain below:
I buy 100 shares @ $15 per share, $1500 = This costs me £997.30 GBP at an exchange rate of 1.52315 with £12.50 transaction fee.
I sell my 100 shares @ %17.75 per share, $1775 = This gives me £1053.06 at an exchange rate of 1.66579 with £12.50 transaction fee.
So profit of about £50.00?
But I don't understand it all, I made $275 and the exchange rate at 1.66? Should i get more?
$1775 @ 1.66579 = £1065.56
$1500 @ 1.52315 = £984.80
£1065.56-984.80 = £80.76 profit
Subtract 2 lots of £12.50 charges leaves you with:
£55.76... nearer the £50 mark
When you bought, the dollar was stronger against the pound than when you sold - if the exchange rate had stayed the same, you would have got the full value of the increase in share prices. Even better, if you had bought @ 1.66 and sold @ 1.50 you would have made even more.
You ideally want to buy when the dollar is weak (eg 2.00) and sell when it is stronger (eg 1.58) so if you buy £100 worth of dollars you get $200, then sell them again at 1.58 (todays rate) and you get £126 back - you've made £26.
You were unlucky and it happened the other way around for you...
I believe you also have to declare it as additional income so the grubby tax man can have his slice too...
Yeah I think you have to declare it as part of capital gains?
I have attached a spreadsheet which could help Newbies in the future, or if you just fancy a dabble.
Needless to say if I had held my nerve until yesterday I'd be taking home £470 quid!