Calculating Profit & Loss Although the trading platform automatically does the profit and loss calculation for you in real time, it is important to understand how these equations are derived.Equations for calculating the major currency pairs:The equation for EUR/USD, GBP/USD, and AUD/USD [direct currency pairs] is as follows: P / L = ( closing rate – opening rate ) x lot size x number of lotsThe equation for USD/JPY, USD/CHF and USD/CAD [indirect currency pairs] is as follows:P / L = ( closing rate – opening rate ) / closing rate x lot size x number of lotsIn a 100,000 units/contract size account, 1 pip results $10 profit/loss in EUR/USD, GBP/USD, AUD/USD, approximately $9 in USD/JPY, and $8 in USD/CHF.

In a 10,000 units/contract size account, 1 pip results $1 profit/loss in EUR/USD, GBP/USD, AUD/USD, approximately $0.9 in USD/JPY, and $0.8 in USD/CHF.

NOTE:  Buy = Long = Ask = Offer ; Sell = Short = Bid
Calculation Example:

The current bid/ask price for EUR/USD is 1.2322/1.2325, meaning to purchase every unit of Euro, you need 1.2325 units of U.S. dollar or sell every unit of Euro, you need 1.2322 units of U.S. dollar.

Let’s assume that you decide the Euro is undervalued against U.S. dollar. To profit from your strategy, you would buy Euro (sell dollar) at 1.2325. Thus when the price of Euro rises, you would sell Euro (purchase U.S. dollar) for a profit.

You bought 100,000 units of Euro at 1.2325.

Some time later, EUR/USD price is at 1.2355/1.2358 just like you expected. So you decide to sell Euro (puchase U.S. dollar) or close your position for a profit.

In this senario, your profit is 1.2355 – 1.2325 = 30 pips.

Equation:
( 1.2355 [ closing rate ] – 1.2325 [ opening rate ] ) x 100,000 [ unit / lot ] x 1 [ lot ] = $300 [ profit ]

True Forex Profit/Loss Calculator

Position: Long (Buy)  
Short (Sell)
Currency Pair:
Opening Rate:
Closing Rate:
Contract Size:
Lot Size:
Profit/Loss in USD:

 

TERMINOLOGIES

What is Pip?
Pip (or Points) is the term used in currency market to represent the smallest incremental move an exchange rate can make. Depending on context, normally one basis point (0.0001 in the case of EUR/USD, GBD/USD, USD/CHF and .01 in the case of USD/JPY).

What is Lot Size?
Lot or Contract is the standard unit of trading on certain exchanges. Gain Scope is the Forex broker that offers flexible contract sizes. To know more about our flexi contract, please see our Trading Platform.

 

Capital:
Entry:
TP Price:
SL Price:
TP: pips
SL: pips
Risk:
Lot: std lot  
Ratio:    

 

Margin is calculated 2 ways: Used Margin and Free Margin. Used margin is the amount of money used to hold open positions. Free margin is the amount of funds available to place additional positions (see image below)

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The margin level is calculated by dividing the current equity in an account by the current amount of margin in use (used margin). ( view figure 2 ) After dividing the equity by the margin move the decimal two places to the right. A trader whose equity is at $1,000 and who is using a $500 of margin would divide 1,000 by 500 which of course equals 2. Then move the decimal two places to the right; thus current margin level or percentage is 200%. At 100% margin level a trader is essentially using their entire available margin. When this level drops to 50% trades will automatically be closed to help ensure that a trader is not subject to losing more money than is held in their account. (see image below)

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