We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Trading Profit?

Malcolm Tatum
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Trading profits are any profits realized on a position that is held for less than twelve successive months. In most countries, regulations governing the declaration of a trading profit require that the position meet certain criteria in order to receive this type of classification. The criteria are often stated more in terms of exclusions rather than identifying much in the way of defining what the return must involve in order to be classified as trading profit.

Outside of the universal understanding that trading profit can only take place with positions held less than one calendar year, the tendency is to identify other characteristics that must not be present in order for the return to be considered trading profit. These characteristics, referred to as exclusions, vary slightly from one nation to another. However, there is a core group of four exclusions that are very common.

First, trading profit may not be recognized on any one-off items that generate profit. Some examples of one-off items would be any profit made from selling off a business or subsidiary or any profit realized from a corporate restructuring. Any profits that are realized from a joint venture with another business would also be excluded. Changes in the fair value of any financial securities held by the company do not qualify as trading profit. Finally, profits realized from impairments cannot be classified as trading profit.

Depending on the financial regulations in place in the country of origin, there may be very little difference between trading profit and the adjusted operating profit of a company. In fact, calculating both figures should yield a result that is very similar in nature. However, it should be noted that the calculation of operating profit might include some of the exclusions that are not considered part of the process for calculating trading profit.

One important thing to keep in mind about trading profit is that it does not carry any special type of rates when it comes to taxes. Unlike some forms of profit that are subject to long-term capital gains taxes, a trading profit is taxed using the standard income tax rates applicable for the period cited.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.