Currency trading offers a challenging and commercial opportunity for experienced Forex investors. Forex market is quite a risky market and traders must always follow their trade positions. The success and failure of a trader is determined in terms of profits/losses calculations. It’s essential for traders to clearly understand their profits and losses, since it directly influences on the margin balance. In case the prices move against you, your margin balance reduces, as a result less money will be left available.
The profit or loss calculation takes place as soon as you close out a trade position. In case of a profit, margin balance rises, and vice versa.
Buy 200,000 USD/JPY:
- We opened a Buy position: bought 200,000 USD at an Ask rate 95.650 paying 95.650 x 200,000 = 19,130,000 JPY
- then we closed our Buy position by selling 200,000 USD at a Bid rate 96.400 getting 19.280.000 JPY
A differential between the initial Ask and the last Bid prices is 75 pips.
There are two ways of calculating our profit:
- 19,280,000 - 19,130,000 = 150,000 JPY
- A pip value (price) is 200,000 x 0.01 = 2,000 JPY; 75 x 2.000 = 150,000 JPY
Our profit is 150,000 JPY (or 1,555,532 USD)
Today, you can calculate profit/loss of any currency pair with the help of a special calculator. The complex calculations are no longer required, you can do everything automatically. Try our Trader's Calculator for free to help you calculate the profit or loss of a currency trade.