How Do I Calculate Profit and Loss in a Cent Account Explained
How to Calculate Profit and Loss in a Cent Account
To calculate the profit or loss for a Cent account a trader will count the number of pips that a currency pair has moved and multiply the number of pips with $0.01 or 1 Cent. $0.01 or 1 Cent is the pip size when trading Cent lots.
1 pip is the smallest forex pair movement used when trading currencies.
1 pip movement when trading Cent lots is equivalent to $0.01 or 1 Cent dollars (100 Units of currency * 0.0001 = $0.01 or 1 Cent )
For Example if EURUSD moves from 1.2000 to 1.2001 this is equal to 1 pip - 1 pip is the fourth decimal point in the forex quote.
The profit or loss will be:
1.2001 - 1.2000 = 1 pip
1 pip* $0.01 or 1 Cent per pip = $0.01 or 1 Cent
Therefore, 1 pip move for Cent lot is equivalent to $0.01 or 1 Cent dollars
If the trade moves in direction of the trade, the trader will make a profit of $0.01 or 1 Cent dollars. If the trade moves against the direction of the trade, the trader will make a loss of $0.01 or 1 Cent dollars.
Example 2: for Example if EURUSD moves from 1.2000 to 1.2050 this is equal to 50 pips - 1 pip is the fourth decimal point in the forex quote.
The profit or loss will be:
1.2050 - 1.2000 = 50 pips
50 pip* $0.01 or 1 Cent per pip = $0.5
Therefore, 50 pips move for Cent lot is equivalent to $0.5 dollars
If the trade moves in direction of the trade, the trader will make a profit of $0.5. If the trade moves against the direction of the trade, the trader will make a loss of $0.5.
Example 3: for Example if EURUSD moves from 1.2000 to 1.2100 this is equal to 100 pips - 1 pip is the 4th decimal place in the fx quote.
The profit or loss will be:
1.2100 - 1.2000 = 100 pips
100 pip* $0.01 or 1 Cent per pip = $1
Therefore, 100 pips move for Cent lot is equal to $1 dollars
If the trade moves in direction of the trade, the trader will make a profit of $1 dollars. If the trade moves against the direction of the trade, the trader will make a loss of $1 dollars.
How to calculate profits and losses of currency trades for a Cent account.
