Working out whether a crypto trade made money sounds simple, but fees, multiple purchases and different cost methods can change the answer. This guide shows how to calculate profit and loss correctly, and what to record in case you need it for tax purposes. It is educational and not tax advice.

The Basic Calculation

Net profit = sale proceeds − purchase cost − all fees. Return on investment (ROI) = net profit ÷ total amount you spent × 100.

Suppose you buy 0.5 of a coin at 30,000 each, which costs 15,000. The exchange charges a 0.5% fee, which is 75, so you spend 15,075 in total. Later you sell the 0.5 coin at 36,000 each, receiving 18,000, and the exchange charges 0.5%, which is 90, so you receive 17,910.

  • Net profit = 17,910 − 15,075 = 2,835.
  • ROI = 2,835 ÷ 15,075 = about 18.8%.

Ignoring fees, the profit would look like 3,000 and 20%. Fees took about 165, which is why they should always be in the calculation. Our guide to ROI and CAGR explains how to compare returns over different periods.

Fees to Count

  • Trading fees on the exchange, usually a percentage of the trade.
  • Spread, the difference between the buy and sell prices when you use an instant buy option.
  • Network or gas fees for moving coins on a blockchain.
  • Withdrawal and deposit fees.
  • Conversion fees if you swap between coins or currencies.

A small fee charged many times adds up quickly, especially for frequent traders.

Several Purchases, One Sale: Which Cost Applies?

If you bought the same coin at different prices, the profit on a sale depends on which units you are treated as selling. Say you buy 1 coin at 30,000 and another at 40,000, then sell 1 coin at 45,000.

  • Average cost: your average purchase price is 35,000, so the profit is 45,000 − 35,000 = 10,000.
  • FIFO (first in, first out): you sell the earliest coin first, so the profit is 45,000 − 30,000 = 15,000.
  • LIFO (last in, first out): you sell the most recent coin first, so the profit is 45,000 − 40,000 = 5,000.

The total profit across all your holdings is the same in the end, but the timing differs. Which method is allowed depends on where you live, and some tax authorities require a specific method. Check your local rules and use the same method consistently.

Realised vs Unrealised Profit

Unrealised profit is the gain on coins you still hold. It changes with the market and is not locked in. Realised profit arises when you sell or otherwise dispose of the asset. Many tax systems tax realised gains, but they may treat swaps between coins, spending crypto on goods, and receiving crypto as income as taxable events too. The details differ by country, so confirm them with your tax authority.

Percentage Gains and Losses Are Not Symmetrical

If an asset falls 50%, it needs to rise 100% to recover. A 20% loss needs a 25% gain. This is why limiting losses matters more than chasing gains, and our guide to calculating percentages covers the arithmetic.

Records to Keep

  • The date, time and type of every transaction.
  • The quantity, price and fiat value at the time.
  • Fees paid, and in which currency.
  • Wallet addresses and exchange names.
  • Transfers between your own accounts, so they are not mistaken for sales.

Many exchanges let you export your history, and keeping those files each year saves a lot of time. Missing records can make it hard to prove your cost basis.

Risk Reminder

Crypto assets can be very volatile and you can lose all the money you invest. Only invest what you can afford to lose, and be wary of anyone promising guaranteed returns. If the investments must comply with Islamic principles, ask a qualified scholar about the specific asset, because scholars hold different views.

Your Next Step

For your next trade, record the cost, the fees and the sale proceeds, then calculate net profit and ROI. Use our Crypto P&L calculator to check the result, and keep a simple spreadsheet of every transaction. This article is general information, not tax or investment advice.