Forex profit-loss calculation
In the previous articles, we have told you that forex profit-loss calculation is very easy. It is about the making a marginal benefit of even a cent, which will result in a big trade of benefit. In this article, we are going to do some mathematical calculation with your lot size to determine whether you will profit in the forex market or make a loss. We will also determine the amount of profit and loss.
We are going to show you the simplest calculation of determining your forex profit and loss. Don’t be afraid as it will be based on your real-life understanding.
Unrealized and realized profit and loss
Before that, we need you to understand that, Forex markets are very rapid. Each trade here opens in a microsecond and they close in a nanosecond before you even blink your eyes. There are two types of profit and loss in a forex market. The unrealized profit and loss and the realized profit and loss.
Because Forex markets are trading in real time, any trade that you are involved can be closed at any time. You may think a trade which will be profitable or loss for you and you even calculated an amount which you will gain when the trade close. But you know, it is marked with the real-time market situation and it can be closed at any time. It is unrealized profit or loss. When the trade closes, you realize the actual profit or loss you make. This is the realized profit and loss.
Calculating profit and loss
Here is the most anticipated part of the article. How you will calculate your profit and loss. Remember this simple formula
The price of your currency when you sell it minus the price of your currency when you bought*lot size=profit or loss
This is as simple as that. When McDonald sold you a hamburger for 2 dollars and it cost them 1.5 dollars to make, they make a profit for .5 dollar. What will happen if they sold similar 1000 hamburger?
We can calculate the profit using the formula,
Price when McDonald sell-Price when McDonald bought*lot size
= (2.00 USD-1.50USD) *1000=500 Dollars.
The McDonald made a profit of 500 dollars.
This is your forex calculation formula for your profit and loss. Simply minus the price of buying from your price of sell and multiply the amount with the lot size of yours. If you receive a positive figure, it is profit. If you receive a negative figure, it is a loss.
Forex trading is an art. As the market is operated in real time, you will have to be-be swift to make your decisions to make cash. Do not wait for a trade to come at your desired point as it may close at any point before you could make money. Make small trade, practice, and practice and you will make money in forex trading in short time. You may lose some trade at first. First, do not lose heart and keep trying.