In this help article, we guide you on how to switch between profit calculation methods and explain the differences between FIFO, LIFO, and Weighted Average.
Accessing the Account Settings
Direct Link to Account Setting page.
Alternatively, you can access the account settings by clicking your profile icon in the bottom-left corner, selecting "Settings," and then navigating to the "Accounts" tab.
Switching the Profit Calculation Method
In the Account Settings page, click on the pencil icon right next to the account for which you want to switch the profit calculation method.
Edit the account settings and under the “Profit Calculation Method,” choose any of the following methods:
FIFO
LIFO
Weighted Average
If you are not familiar with these calculation methods, it is recommended to leave it as FIFO.
Differences Between Profit Calculation Methods
FIFO (First In, First Out):
Explanation: This method assumes that the first assets you purchase are the first ones you sell.
Example: If you bought 100 shares at $10 and then 100 shares at $15, FIFO would calculate the cost of the sold shares starting with the $10 shares.
LIFO (Last In, First Out):
Explanation: This method assumes that the last assets you purchase are the first ones you sell.
Example: Using the same purchase scenario, LIFO would calculate the cost of the sold shares starting with the $15 shares.
Weighted Average:
Explanation: This method calculates the cost of sold shares based on the average cost of all shares you own.
Example: If you bought 100 shares at $10 and 100 shares at $15, the weighted average cost would be $12.50 per share.
By understanding and utilizing these profit calculation methods, you can better manage your trades and accurately assess your profits in TradeZella.
Need further support? Contact our support team at support@tradezella.com