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Introduction
The calculation of return for the stock market or any tradable equities is quite easy if you have the information below: When is the trading happening and how much have you gained.
How to made the return graph-able is the question I’m going to answer. I’ve created a trend graph that can be easily understand. It can also show the relative return compared to the index.
Chapter 1 Gain and Loss
Price trend is popular for most investors. However, it can’t show the return directly. Sometime it is even misleading most investor to draw a wrong conclusion.
/Graph 1/
For example:
If you buy the apple stock at price of 170, then the price ran into 220 and you sell it. There is nearly 29% profit.
*Equation 1*
Profit = Sell price / Buy price — 1
If you buy at 220 and sell at 170, there is only 77% money left and the loss is 23%
*Equation 2*
Loss = 1 — Sell price / Buy price
The stock price is up 50 when you got 29% gain. The stock price is down 50 when you got 23% loss. Although the price up and down are the same, the gain rate and the loss…
