How to Calculate Your Profit and Loss.
Each trading operation results in either profit or loss the calculation of which is performed automatically in the trading platform server. However, it is useful to know how this calculation is formulated. There are 3 important things to consider during the calculation: the volume of the opened position, the asset quotation and the direction of the position (Buy/Sell).
Calculating Profit and Loss.
Let us suppose the rate of USD/JPY is 95.620/95.650 and you have decided to buy 200 000 USD. Your trade is executed at the Ask price 95.650.
200 000 USD * 95.650 = 19 130 000 JPY.
So, you bought 200 000 USD and sold 19 130 000 JPY.
Let us suppose that the rate of the USD/JPY changes to 96.400/96.430 and you decide to sell 200 000 USD back. The operation is performed at the Bid price 96.400.
200 000 USD * 96.400 = 19 280 000 JPY.
The differential between the initial Ask and the last Bid prices is 75 pips (750 in the terminal). Thus, you bought 200 000 USD for 19 130 000 JPY and sold 200 000 USD back for 19 280 000 JPY.
The difference is your profit: 19 280 000 – 19 130 000= 150 000 JPY.
Afterwards, you can calculate this amount in USD.
150 000 JPY/96.400 = 1556.01 USD.
There is also another calculation method. 1 pip value in USD/JPY is equal to 0.01, thus there is 2 000 JPY in 200 000 volume (200 000 * 0.01 = 2 000 JPY). Since the difference between the initial Ask and the last Bid price is 75 pips, we do the following: 75 * 2 000 = 150 000 JPY or 1556.01 USD.
© IFCMARKETS. CORP. 2006-2017 IFC Markets is a leading broker in the international financial markets which provides online Forex trading services, as well as future, index, stock and commodity CFDs. The company has steadily been working since 2006 serving its customers in 18 languages of 60 countries over the world, in full accordance with international standards of brokerage services.
Risk Warning Notice: Forex and CFD trading in OTC market involves significant risk and losses can exceed your investment.
IFC Markets does not provide services for United States and Japan residents.

Calculating Profits And Losses Of Your Currency Trades.
Currency trading offers a challenging and profitable opportunity for well-educated investors. However, it is also a risky market, and traders must always remain alert to their trade positions. The success or failure of a trader is measured in terms of the profits and losses (P&L) on his or her trades. It is important for traders to have a clear understanding of their P&L, because it directly affects the margin balance they have in their trading account. If prices move against you, your margin balance reduces, and you will have less money available for trading.
Realized and Unrealized Profit and Loss.
Until a position is closed, the P&L will remain unrealized. The profit or loss is realized (realized P&L) when you close out a trade position. When you close a position, the profit or loss is realized. In case of a profit, the margin balance is increased, and in case of a loss, it is decreased.
The total margin balance in your account will always be equal to the sum of initial margin deposit, realized P&L and unrealized P&L. Since the unrealized P&L is marked to market, it keeps fluctuating, as the prices of your trades change constantly. Due to this, the margin balance also keeps changing constantly.
Calculating Profit and Loss.
Let's look at an example:
Assume that you have a 100,000 GBP/USD position currently trading at 1.6240. If the prices move from GBP/USD 1.6240 to 1.6255, then the prices have move up by 15 pips. For a 100,000 GBP/USD position, the 15 pips movement equates to USD 150 (100,000 x 15).
To determine if it's a profit or loss, we need to know whether we were long or short for each trade.
Long position: In case of a long position, if the prices move up, it will be a profit, and if the prices move down it will be a loss. In our earlier example, if the position is long GBP/USD, then it would be a USD 150 profit. Alternatively, if the prices had moved down from GBP/USD 1.6240 to 1.6220, then it will be a USD 200 loss (100,000 x -0.0020).
Short position: In case of a short position, if the prices move up, it will be a loss, and if the prices move down it will be a profit. In the same example, if we had a short GBP/USD position and the prices moved up by 15 pips, it would be a loss of USD 150. If the prices moved down by 20 pips, it would be a USD 200 profit.
The following table summarizes the calculation of P&L:
Another aspect of the P&L is the currency in which it is denominated. In our example the P&L was denominated in dollars. However, this may not always be the case.
In our example, the GBP/USD is quoted in terms of the number of USD per GBP. GBP is the base currency and USD is the quote currency. At a rate of GBP/USD 1.6240, it costs USD 1.6240 to buy one GBP. So, if the price fluctuates, it will be a change in the dollar value. For a standard lot, each pip will be worth USD 10, and the profit and loss will be in USD. As a general rule, the P&L will be denominated in the quote currency, so if it's not in USD, you will have to convert it into USD for margin calculations.
Consider you have a 100,000 short position on USD/CHF. In this case your P&L will be denominated in Swiss francs. The current rate is roughly 0.9129. For a standard lot, each pip will be worth CHF 10. If the price has moved down by 10 pips to 0.9119, it will be a profit of CHF 100. To convert this P&L into USD, you will have to divide the P&L by the USD/CHF rate, i. e., CHF 100 / 0.9119, which will be USD 109.6611.
Once we have the P&L values, these can easily be used to calculate the margin balance available in the trading account. Margin calculations are typically in USD.
You will not have to perform these calculations manually because all brokerage accounts automatically calculate the P&L for all your trades. However, it is important that you understand these calculations as you will have to calculate your P&L and margin requirements while structuring your trade even before you actually enter the trade. Depending on how much leverage your trading account offers, you can calculate the margin required to hold a position. For example, if your have a leverage of 100:1, you will require a margin of $1,000 to open a standard lot position of 100,000 USD/CHF.

Profit/Loss Calculator.
Evaluate and compare the results of several possible market scenarios. Through Profit/Loss (Forex) calculator you can quickly assess the possible profit or loss and make right decision regarding the choice of the trading instrument.
Set Deal volume, Open and Close price, choose directon of trade (Buy/Sell) and press "Calculate".
USD EUR GBP JPY AUD 1 USD 1.0000 1.0000 1.0000 1.0000 1.0000 Inverse 1.0000 1.0000 1.0000 1.0000 1.0000 1 EUR 1.0000 1.0000 1.0000 1.0000 1.0000 Inverse 1.0000 1.0000 1.0000 1.0000 1.0000 1 GBP 1.0000 1.0000 1.0000 1.0000 1.0000 Inverse 1.0000 1.0000 1.0000 1.0000 1.0000.
© IFCMARKETS. CORP. 2006-2017 IFC Markets is a leading broker in the international financial markets which provides online Forex trading services, as well as future, index, stock and commodity CFDs. The company has steadily been working since 2006 serving its customers in 18 languages of 60 countries over the world, in full accordance with international standards of brokerage services.
Risk Warning Notice: Forex and CFD trading in OTC market involves significant risk and losses can exceed your investment.
IFC Markets does not provide services for United States and Japan residents.

Profit loss calculation forex

Now that you know how forex is traded, it’s time to learn how to calculate your profits and losses. When you close out a trade, take the price (exchange rate) when selling the base currency and subtract the price when buying the base currency, then multiply the difference by the transaction size. That will give you your profit or loss.
Price (exchange rate) when selling the base currency – price when buying the base currency X transaction size = profit or loss.
Let’s look at an example.
Assume you buy Euros at $1.2178 per Euro and sell Euros at $1.2188 per Euro. The transaction size is 100,000 Euros. To calculate your profit or loss, you take the selling price of $1.2188, subtract the buying price of $1.2178 and multiply the difference by the transaction size of 100,000.
($1.2188 – 1.2178) X 100,000 = $100.
In this example, you would have a $100 profit from this transaction.
Let’s try it again using a different currency.
Assume you buy British pounds at $1.8384 and sell them at $1.8389. The transaction size is 10,000. What is your profit or loss?
When you think you know the answer, advance to the next screen.
By following the formula we discussed earlier, you should be able to determine that you would see a $5.00 gain from this transaction.
($1.8389 – $1.8384) X 10,000 = $5.00.
If you sell 100,000 Euros at $1.2170 per Euro and buy 100,000 Euros at 1.2180 per Euro, would you have a profit or loss on the transaction and how much would it be?
Take the selling price of $1.2170 and subtract the buying price of $1.2180 and then multiply the difference by 100,000.
($1.2170 – $1.2180) X 100,000 = –$100.
If you calculated a loss of $100, you calculated correctly.
You can also calculate your unrealized profits and losses on open positions. Just substitute the current bid or ask rate for the action you will take when closing out the position. For example, if you bought 100,000 Euros at 1.2178 and the current bid rate is 1.2173, you have an unrealized loss of $50.
($1.2173 – $1.2178) X 100,000 = –$50.
Similarly, if you sold 100,000 Euros at 1.2170 and the current ask rate is 1.2165, you have an unrealized profit of $50.
($1.2170 – $1.2165) X 100,000 = $50.
If the quote currency is not in US dollars, you will have to convert the profit or loss to US dollars at the dealer’s rate.
Let’s look at an example using a USD/JPY spread. If you lost 50,000 Japanese yen on the transaction and the dealer’s rate is $.0091 for each yen, what is your loss in dollars? By multiplying the transaction size (50,000) by the dealer’s rate ($.0091), you will find that your loss is $455.
50,000 X $.0091 = $455.
Remember that you must also subtract any dealer commissions or other fees from your profits or add them to your losses to determine your true profits and losses. Also, remember that the dealer makes money from the spread. If you immediately liquidate your position using the same spread, you will automatically lose money.
Q: A speculator believes that the Swiss Franc will appreciate against the US Dollar and enters into a forex transaction when the USD/CHF spread is 1.2584/1.2586. In this situation, what will the speculator do?
A. Sell US dollars and buy Swiss francs at 1.2586.
B. Sell US dollars and buy Swiss francs at 1.2584.
C. Sell Swiss francs and buy US dollars at 1.2586.
D. Sell Swiss francs and buy US dollars at 1.2584.
A: The correct answer is B.
In this case, the speculator needs to buy Swiss Francs and sell US Dollars. That eliminates C and D as possible answers. In order to identify the correct answer, it is helpful to review the concept of the bid/ask spread. When you sell dollars to a dealer, the dealer wants to buy the currency at the bid price. In this case, when you sell dollars to the dealer, you will receive only 1.2584 Swiss francs for every dollar you sell.
Q: If a speculator buys a EUR/USD spread when the spread is 1.1020/24 and immediately sells it back to the dealer at the same spread, what will be the end result?
C. No gain or loss.
D. There is not enough information in the problem to answer the question.
A: The correct answer is B.
Q: When the dealer quotes a spread, the dealer is seeking to buy at the low price and sell at the high price. If a speculator enters this spread, she will have bought the currency at 110.24 and when she sells the currency back, she will have sold it for 110.20, giving her an immediate four point loss. A speculator with $500,000 wants to buy Canadian dollars when the spread is 1.1957/62. The position is offset when the spread is 1.1862/66. What will be the result?
A: The correct answer is C.
In this case, our speculator sold US dollars and received Canadian dollars. As a result, the speculator received 1.1957 Canadian dollars for each US dollar (the bid price, or the price at which the dealer would be willing to sell Canadian dollars for US dollars). The speculator received 597,850 Canadian dollars (1.1957 X 500,000). Subsequently, the value of the US dollar depreciated against the Canadian dollar. The speculator bought 500,000 US dollars and sold Canadian dollars for 1.1866 (the dealer ask price) and paid 593,300 Canadian dollars. The speculator still had 4,550 Canadian dollars, which represents his profit. However, before you can answer the question, you must convert Canadian dollars into US dollars.
To solve this problem, you need to find out how many US dollars it takes to buy 4,550 Canadian dollars. When the speculator reversed the long Canadian dollar position, it took him 1.1866 Canadian dollars to buy one US dollar; so to find his profit, the speculator can simply divide the Canadian dollar profit (Canadian 4,550) by 1.1866 Canadian dollars per US dollar. The result is $3,834 US dollars.
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