The Profit Calculator
Forex Profit Calculator is a simple tool that will help you determine a trade’s outcome/profit.
Before taking a trade, it is very important to know what you stand to gain or lose from it.
Then you can decide whether to continue and take a trade or not.
You can also set different bid and ask prices and compare the results on the forex profit calculator.
What you should look at to calculate the profit /loss on a trade
- Your Trading Account’s currency
- Opening trade price
- Trade direction
- Trade size
- And closing trade price.
How to use a forex profit calculator
- First,Pick the currency pair you wish to trade
- Choose if you are selling or buying
- Set the open and close price
- Select in which currency you would like to see the results
- Type the number of units in the trade (position size).
- Click on the Calculate button.
The profit/loss is shown below this button (a negative value indicates a loss).
- To compare new values, just change them and use the Calculate button again to see the results.
How to Calculate Profit and Loss using a formula
To clearly understand the profit and loss calculation, we shall consider some examples on how to calculate profit or loss with a formula.
The following two examples illustrate how to calculate profit or loss after taking a trade.
1st example on how to calculate profit or loss
It simply means you can buy $1 at 1.2340 CAD or sell $1 at 1.2338 CAD.
When you buy $10,000 each at 1.2340, you will pay (10,000 x 1.2340) = 12340 CAD.
After taking a trade and price rises to 1.2515/1.2517.
Since we are buying USD while selling the CAD, to close trade we must sell the dollar and buy back the CAD.
To calculate your profit,
Selling $10,000 at 1.2515, you will receive (10000 x 1.2515) = 12515 CAD
Net profit = (12515 – 12340)
= 175 CAD
To change your profits into dollars, you simply divide your answer with the current exchange rate (price), USD/CAD at 1.2515.
Profit = 175/1.2515
2nd example on how to calculate profit or loss
Now from the example above, let’s say we decide to sell USD/CAD and trade at the same price 1.2338/1.2340.
To sell $10,000 you pay 12338 CAD (10,000 x 1.2338).
However, if USD strengthens after taking a trade and closes with your stop loss to 1.2515/1.2517.
This means your minimum loss attained after selling $10,000 at 1.2517 and received 12517 CAD.
You sold $10,000 at 1.2338 CAD, receiving 12338 CAD.
When you buy back $10,000 at 1.2517, you pay 12517 CAD.
The difference is (12338 – 12517) = -179 CAD
Total Loss = (179) CAD
To convert it to dollar, you simply multiply by the current rate, USD/CAD rate, 1.2517
= Total loss in dollars = ($143)
How long you can hold an open position in forex, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer,...
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