Stock Price Upside Returns Calculator: Upside Produces Large and Small Gains
The Stock Price Upside Calculator generates a price stream using a random component based on input parameters that you set, finds the maximum price from all of the prices in the stream and then computes the percent return for each price based on the maximum price.
Percent return = ((Maximum Price - Price) / Price) * 100
In general the highest percent returns result from buying at the relatively low prices at the beginning of the upside. As prices near the maximum price of the upside, the percent returns tend to become smaller. This point is important, especially in the days of chat rooms and media hype, where many first-time traders hear about extraordinary gains made with cryptocurrencies and meme stocks. In reality huge gains can be made only a few times during an upside price move. Traders who buy at relatively low prices at the beginning of the price upside are in the position to make large gains particularly if prices increase substantially. But after prices move up from the bottom, many gains are modest to small and some are actually negative in real-world trading.
So only a few traders actually make spectacular gains because they bought at very low prices and sold their shares at very high prices to unsuspecting traders who think prices will continue to rise. This is especially true when prices follow an unsustainable rate of increase to form a price bubble.
Beware of the hype associated with rapidly accelerating prices for financial assets.