Gross and Net Profit
Gross profit or loss is the result from the price difference alone; net profit or loss is what remains after commissions, fees, interest, financing and other costs.
A trade can look like a winner on the chart and still lose money in your account. The gap is costs. Gross profit is what the price move alone made you; net profit is what you actually keep once every commission, fee, spread and financing charge has been taken out. Only the net number pays your bills.
- Category
- Accounting, Tax and Operations
- Reading time
- 5 min
- Also called
- Gross and net P&L, Gross vs. net return
- Updated
Gross and net profit in plain words
Gross profit is the exit value minus the entry value, nothing more. Net profit starts from that number and subtracts every cost the trade created.
Costs are rarely zero. You can pay commissions, spreads or markups each time you trade, plus ongoing charges such as account or platform fees.1 Even small fee differences can take a big share of your returns over time.2
“Zero commission” does not mean zero cost: brokers can still earn money from you in other ways, such as interest on margin loans.2 Track results as Profit and Loss after costs, and see Trading Fees and Commissions.
How to work out net profit, step by step
Record entry and exit
Write down the price, size and date of both sides of the trade.
Calculate gross profit
(Exit price − entry price) × quantity for a Long Position trade; reverse it for a Short Selling trade.
List transaction costs
Add commissions and exchange fees on both the buy and the sell; each trade can carry its own charge.1
Add financing costs
Include margin interest, overnight swap or Funding Rate payments for leveraged or held positions.
Include hidden costs
Count the Bid-Ask Spread and Slippage — the difference between the price you expected and the price you got.
Subtract and review
Net profit = gross profit − all costs. Compare the two numbers in your Trading Journal every month.
Worked examples
Example 1 — A small winner shrinks
Net profit $30You buy 100 shares at $50.00 and sell at $50.40. Commission is $5 per side.
| Gross profit | ($50.40 − $50.00) × 100 = $40 |
| Costs | $5 + $5 = $10 |
| Net profit | $40 − $10 = $30 |
A quarter of the gross profit went to costs.2
Example 2 — Gross win, net loss
Net loss −$2A scalp makes $12 gross. Commissions are $4 + $4 and slippage cost $6.
| Gross profit | $12 |
| Costs | $4 + $4 + $6 = $14 |
| Net result | $12 − $14 = −$2 |
The price moved your way, but costs turned the trade into a loss — a common problem with very short trades.
Example 3 — Financing on a held position
Net profit $400You hold a leveraged position for 10 days and make $500 gross. Financing is $8 per day, commissions $20 in total.
| Financing | $8 × 10 = $80 |
| Total costs | $80 + $20 = $100 |
| Net profit | $500 − $100 = $400 |
Holding costs grow with time, so the longer a leveraged position stays open, the bigger the gap between gross and net.2
Gross profit vs. net profit
| Aspect | Gross profit | Net profit |
|---|---|---|
| What it measures | Price move only | What you actually keep |
| Includes costs | No | Yes — fees, spreads, financing |
| Useful for | Judging the trade idea | Judging the business of trading |
| Common mistake | Reported as the result | Forgotten until tax time |
When the gross–net gap matters most
Frequent trading
Many trades multiply per-trade costs, so net results can differ sharply from gross.
Short-term strategies
Small targets leave little room for spreads and commissions.
Leveraged positions
Daily financing costs build up the longer you hold.
Strategy testing
A Backtesting result without costs overstates the real edge.
Advantages and disadvantages
Advantages
- Shows the true result of your trading.
- Reveals which strategies only work before costs.
- Helps you compare brokers and account types fairly.
- Makes your journal and statistics honest.
Disadvantages
- Requires recording every cost, which takes effort.
- Some costs, like spreads and slippage, are not itemised on statements.
- Financing charges can be hard to allocate to a single trade.
- Tax is a further deduction whose rules differ by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Two numbers, one trade
Beginner
Always write down both numbers. Gross tells you whether the idea worked; net tells you whether it paid.1
Costs per trade vs. ongoing costs
Intermediate
Per-trade costs scale with how often you trade; ongoing costs such as account or platform fees are charged whether or not you trade.1 Both belong in your net figure, and both affect your Break-Even point.
Costs change your edge
Advanced
A strategy’s Expectancy should be measured net of costs. A system that wins a small amount per trade gross can have negative expectancy once fees and Slippage are included, because fee differences compound over time.2
Common mistakes
Quoting gross results
Telling yourself or others the gross number makes performance look better than it is.
Ignoring the spread
The spread is a cost even when no commission is charged.
Forgetting financing
Overnight and margin interest add up on positions held for weeks.
Backtesting without costs
A test with no fees and no slippage is a best-case fantasy.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Gross profit is the price move alone.
- Net profit is what remains after all costs.
- Costs include commissions, spreads, slippage, financing and account fees.
- Frequent and short-term trading widens the gap between gross and net.
- Judge strategies and track your journal on net results.
Frequently asked questions
Is net profit the same as taxable profit?
Why is my broker statement different from my own calculation?
Can a trade with a gross profit be a net loss?
Further learning
- Trading Fees and Commissions
The full list of costs that turn gross into net.
- Realized and Unrealized P&L
When a profit becomes real.
- Expectancy
Measuring an edge after costs.
- Trading Journal
Recording both numbers for every trade.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- SEC Office of Investor Education and Assistance (Investor.gov). How Fees and Expenses Affect Your Investment Portfolio – Investor Bulletin (opens in a new tab) Checked .
- FINRA. Fees and Commissions (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.