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 calculate the profit or loss for a Standard trading account one will count number of pips that a forex pair has moved & multiply that number with $10. $10 is the pip size when trading forex Standard lots.

1 pip is the minimum/smallest currency pair movement which is used when trading the currencies.

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

For Example if EURUSD moves from 1.2000 to 1.2001 this is equal to one pip - one pip is the fourth decimal point in the currency quote.

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

If the FX trade moves in the direction of the FX trade, the FX trader will earn a profit of $10 dollars. If the FX trade moves against the direction of the FX trade, the FX trader will accrue a loss of $10 dollars.

Example 2: for Example if EURUSD moves from 1.2000 to 1.2050 this is equal 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 lot is equal to $500 dollars

If the FX trade moves in the direction of the FX trade, the FX trader will make a profit of $500 dollars. If the FX trade moves against the direction of the FX trade, the FX trader will make a loss of $500.

Example 3: for Example if EURUSD moves from 1.2000 to 1.2100 this is equal to 100 pips - one pip is the fourth decimal point in the currency quote.

The profit or loss will be:

1.2100 - 1.2000 = 100 pips

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

Therefore, 100 pips move for Standard lot is equivalent to $1,000 dollars

If the FX trade moves 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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