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 account a trader will count the number of pips that a currency pair has moved and multiply the number of pips with $10. $10 is the pip size when trading forex Standard lots.
1 pip is the smallest currency pair movement used when trading 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 1 pip - 1 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 pip = $10
Therefore, 1 pip move for Standard lot is equivalent to $10 dollars
If the trade moves in the direction of the trade, the trader will make a profit of $10. If the trade moves against the direction of the trade, the trader will make a loss of $10.
Example 2: for Example if EURUSD moves from 1.2000 to 1.2050 this is equal to 50 pips - 1 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 pip = $500
Therefore, 50 pips move for Standard lot is equal to $500 dollars
If the trade moves in the direction of the trade, the trader will make a profit of $500 dollars. If the trade moves against the direction of the trade, the 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 - 1 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 trade moves in the direction of the trade, the trader will make a profit of $1,000 dollars. If the trade moves against the direction of the trade, the trader will make a loss of $1,000 dollars.
How to calculate profits and losses of currency trades for a Standard account.
