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How to Calculate Forex Profit and Loss in a Standard Account Explained

How to Calculate Forex Trading Profit and Loss in a Standard Account

To figure out profit or loss in a Standard trading account, count the pips a forex pair moves. Then multiply that count by $10. This $10 amount sets the pip value for forex Standard lots.

One pip marks the tiniest shift in a currency pair during forex trades.

1 pip move when trading Standard lots/contracts is equivalent to $10 (100,000 units of currency * 0.0001 = $10)

Like, if EURUSD goes from 1.2000 to 1.2001, it's like one pip: this pip is the fourth number after the dot in the forex price.

The profit or loss will be:

1.2001 - 1.2000 = 1 pip

1 pip* $10 per 1 pip = $10

Therefore, 1 pip move for Standard lot is equivalent to $10 dollars

When the FX trade follows its set direction, the FX trader gains $10. If the trade shifts against that direction, the trader loses $10.

Example 2: e.g. if the EUR/USD forex pair heads from 1.2000 to 1.2050 - this is equivalent to 50 pips - one pip is the 4th decimal place in the forex quote.

The profit or loss will be:

1.2050 - 1.2000 = 50 pips

50 pip* $10 per 1 pip = $500

Hence, 50 pips move for Standard contract/lot is equivalent to $500

If the FX trade moves in the intended direction, the trader earns a profit of $500. Conversely, if it moves against the trade's direction, the trader incurs a $500 loss.

Example 3: EUR/USD from 1.2000 to 1.2100 equals 100 pips. One pip is the fourth decimal in forex quotes.

The profit or loss will be:

1.2100 - 1.2000 = 100 pips

100 pip* $10 per pip = $1,000

Thus, a 100 pip fluctuation for a Standard lot represents an equivalent of $1,000 USD.

If the FX trade heads in the direction of the FX trade, the FX trader will make a profit of $1,000 dollars. If the FX trade moves against the direction of the FX trade, the FX trader will make a loss of $1,000 dollars.

How to calculate profits & losses of currency trades for a Standard account.

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