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.
Switching the Profit Calculation Method
You can update your profit calculation method directly from the Add Trade page or Account Settings.
Go to the Add Trade page or Account Settings.
Click the three dots (…) next to the account you want to modify.
Click the "Edit" button.
Under “Profit Calculation Method,” select one of the following:
FIFO
LIFO
Weighted Average
Save your changes.
💡 If you’re unsure which method to choose, 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.
If you have any questions or need assistance, feel free to reach out to our support team — we’re here to help!