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Author Topic: Simple formulas for calculating break even point  (Read 65 times)
clover12
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July 17, 2018, 02:43:23 AM
 #1

Newbie here checking in with some wild numbers here

A fictitious example of a buy and hold and sell:

My buddy purchased some bitcoin at the following prices in USD

$10,500
$7,700
$11,900
$5,900

He wants to know where the break-even point is on these

So the formula is:

Add up all four purchase prices  and divide by 4 = break even point, right?

Furthermore, what if he wanted to calculate where a +30% profit above the break even point would be at?

(all four price points X 30%) + break even point = 30% profit point

Am I on the right track with these numbers?

Total newb Smiley
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pooya87
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July 17, 2018, 03:57:11 AM
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 #2

these seem correct to me but with two starting assumptions:
1. there are no fees
2. you are buying the same amount on each price.

to add the fees you have to calculate them for each purchase and sale and add it to your final price calculation which means you have to sell at a little bit higher price than what you were calculating before to cover the fees.

also if you buy for example 1BTC at first price, 0.5BTC, 2BTC, 0.0001BTC on the rest then you have invested $38150.59 and selling at 9000 (price sum/4) would give you $31500.9 but if you buy 1BTC at each price you will invest 36000 and selling gives you 36000 (assuming fees are zero).
to solve this the formula is this:
Code:
sell price = total_amount_invested / total_bitcoin_you_bought
in this case sell break even price would be $10899.85

Lakai01
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July 17, 2018, 04:15:25 AM
 #3

As far as your buddy always bought exactly 1 BTC its correct. Depending on where are you from you maybe have to include taxes as well.

I would recommend you to use apps like blockfolio. They keep track of your investments and calculate things like loss and profit for you

nngella
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July 17, 2018, 04:43:01 AM
 #4

these seem correct to me but with two starting assumptions:
1. there are no fees
2. you are buying the same amount on each price.


These two (2) assumptions are important, especially the first one.  You may notice that because of the exchange fees, you are losing money than what you expect.

Better get an excel spreadsheet then make a template using the right formula so that you just need to input one number and then it will come up with an analysis of your profit/loss.
clover12
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July 17, 2018, 05:59:02 PM
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I would recommend you to use apps like blockfolio.

Bingo.  I'm all over that idea. Tongue
boysthanos12
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July 17, 2018, 08:31:30 PM
 #6

It seems you forgot the fee. Anyways you can subtract your profit from the fee and the answer will be your last profit, let me put it this way your profit is 10k dollars (without the capital/the money you invested then the fee overall is 50 (let's assume that 50 dollars is the fee) then your profit is 9950 dollars.
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July 17, 2018, 09:46:07 PM
 #7

As far as your buddy always bought exactly 1 BTC its correct. Depending on where are you from you maybe have to include taxes as well.

I would recommend you to use apps like blockfolio. They keep track of your investments and calculate things like loss and profit for you

Not only for 1 BTC, if the buddy bought same amount of BTC let say "X" in each transaction.

X can be 1 , 2, .5  or any positive Real Number.


PS: Pooya87 explained it so nicely, I do not think you need any further response on this topic, so lock it. Using the app is ok but knowledge of basic mathematics will not hurt you
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