Image by Gerd Altmann from Pixabay
In this article, I'm going to be demonstrating how to calculate a percentage change. Since many of you reading this will be dealing with crypto cash, you may find this post useful.
So, let's say for example your one Bitcoin is worth £8,200. Let's then say after a couple of days, its value rose to £8,400. What was the percentage change?
Well, you had a starting value of £8,200. Let's call this (x). You ended up with your starting value (x) plus the percentage change (p) multiplied by your starting value (p*x). We'll call this final value (y).
x = starting value
p = percentage change
y = final value
In mathematical terms, your final value can be described as thus:
y = x + x*p = x*(1 + p)
Since you are only looking for the percentage change, you must isolate (p).
Here are the steps to isolate (p):
y = x*(1 + p)
1 + p = y/x
p = (y/x) - 1
In ordinary words, the percentage change (p) should be:
Percentage Change = (Final Value / Starting Value) - 1
With this, you'd get a fraction which needs to be turned into a percentage that appeals to the human mind.
To spice up your final result, you can multiply by 100.
So you could say that:
p = [(y/x) - 1]*100
Or in words...
Percentage Change = [(Final Value / Starting Value) - 1]*100
Anyway, let me demonstrate how this would work in principle:
Here are your values:
Final Value = £8,400
Starting Value = £8,200
So, you could calculate the percentage change in this manner:
Percentage Change = [(£8,400 / £8,200) - 1]*100
Which is the same as:
p = [(y/x) -1]*100
Your result should be:
+2.44% (to 2 decimal places)
Now you can check this result and the power of the formula:
£8,200 * 2.44% = £200.08
The difference between £8,200 and £8,400 is exactly £200, so you can tell that the formula works.
This is the beauty of financial mathematics.
Video related to this post (05.10.2020):