Calculation of Profit and Loss for EURO/USD Trade:
- Buy trade executed at 1.5555 and sell trade executed at 1.5560.
- Profit/Loss = 1.5560 – 1.5555 = 0.0005 OR 5 Pips.
- Since the quote currency (second currency) is USD, profit and loss in USD terms = 0.0005 x 100,000 = 50 USD ALTERNATIVELY profit and loss = 5 Pips x 10 USD =50 USD
- If you are a trader from EURO zone and you wish to calculate your profit and loss in EURO terms then you need to apply basic math. Divide your USD profit and loss by the exchange rate i.e. 1.5560. It works out to 50/1.5560 = 32.13 EURO. This point has been explained just for the academic interest as all the forex trading brokers display your profit and loss in USD terms.
Calculation of Profit and Loss for USD/CHF Trade:
- Buy trade executed at 1.0473 and sell trade executed at 1.0488.
- Profit/Loss = 1.0473 – 1.0488 = 0.0015 OR 15 Pips.
- Since the quote currency (second currency) is CHF (other than USD), profit and loss in USD terms = 0.0015/1.0488 x 100,000 = 143.02 USD.
Calculation of Profit and Loss for USD/JPY Trade:
- Buy trade executed at 108.09 and sell trade executed at 108.30.
- Profit/Loss = 108.30 – 108.09 = 0.21 OR 21 Pips.
- Since the quote currency (second currency) is JPY (other than USD), profit and loss in USD terms = 0.21/108.3 x 100,000 = 193.91 USD.