How to calculate the profit/loss for a trade?
To calculate the profit/loss for a trade, you would first need to calculate the Pip Value for your trade. The Pip Value refers to the profit/loss you would be making per pip movement. This can be calculated using the formula below:
Pip Value = Contract Size x Lot Size x Size of Pip in Decimal Places
- The contract size can be found in the instrument specifications on MetaTrader
- The lot size is the volume chosen for your trade
- The size of pip is the location of the pip in the price of the instrument, for example, for EURUSD, the size of pip would be 0.0001 (Since a pip is the second smallest measure of change in the price)
You can then calculate the profit/loss by multiplying the Pip Value by the pip movement of the trade. The pip movement is calculated using the formulas below:
Pip movement for long positions = (Close price - Open price) / Size of Pip
Pip movement for short positions = (Open price - Close price) / Size of Pip
For example, if you open a 1 lot long on EURUSD at 1.10051 and close it at 1.10351, your Pip Value would be the following:
Pip Value = 100,000 x 1 x 0.0001 = 10
Pip Movement = (1.10351 - 1.10051) / 0.0001 = 30
Profit/Loss = 10 x 30 = 300 USD
Please keep in mind that the result of this formula will always be given in terms of Quote Currency, you will then need to convert this to your account's set currency.
For example, if you work out the margin required to open a EURJPY trade, you will need to convert the result from JPY to your account's set currency.