Forex basic - Profit/Loss

Now let’s consider calculating profit/loss.

The formula is as follows: [(Close Price-Open Price)*contract size*lots}

For a Buy position: 

Profit/Loss = (Contract * ClosePrice) - (Contract * OpenPrice)

For a Sell position: 

Profit/Loss = (Contract * OpenPrice) - (Contract * ClosePrice), where:

Profit/Loss – profit/loss in the quote currency

Contract – the contract size in the base currency

ClosePrice – the closing price of the currency pair

OpenPrice – the opening price of the currency pair

Example 2: Calculating profit/loss for a Sell position in EURGBP on a trading account with USD as the deposit currency:

Lot = 0.19;

Trading Instrument (Currency Pair) – EURGBP

OpenPrice EURGBP = 0.6983

ClosePrice EURGBP = 0.6883 (100 pips = 0.6983 - 0.6883 = 0.0100)

Contract = 19,000 EUR

GBPUSD Rate = 2.0256 (necessary for converting the profit/loss into the deposit currency)

Calculation:

1. Profit/Loss = (19,000 * 0.6983) - (19,000 * 0.6883) = 13,267.7 – 13,077.7 = 190 GBP

2. Now we convert the profit/loss into USD. If USD is the first currency in the pair under consideration, the profit/loss should be divided by the rate, otherwise it should be multiplied:

Profit/Loss = 190 GBP * 2.0256 = 384.86 USD

Profit/loss for Gold (spot), Share СFDs, Futures and other currency pairs is calculated in the same way.