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How to Calculate Forex Profits

By Edited May 2, 2016 0 0

In order to calculate your profits when making a Forex trade, you have to understand exactly how the system works. It is extremely simple, although it does get fairly complex when you factor in currency conversions. This article is going to give you a basic understanding of how to calculate your profits when trading Forex. If you can count pips, then you can count profits. It's as simple as that.

When you begin, you look exactly how many pips you've made or lost. In order to figure out your profit without calculating the spread, take each of those pips and multiply them by the number of mini lots you're trading. If you're trading one lot, that means for each pip you've made, you add $10 to your account. This is only true if the counter currency is the dollar.

If the countercurrency you're trading is different, then you have to count based on that. So if we are trading the EUR/GBP, you have to calculate your profits in terms of the Great Britain pound. So that means if you make 20 pips, you have made 20 Great Britain pounds for every single mini lot that you are trading. Take this into account before making the trade. You'll have to convert it back to whatever currency your account is based on after the trade is over.

One last thing to factor in is the spread. The spread is essentially the difference between the bid and the ask price you have available to you. You pay this every single time you make a trade. So pay attention to it. In this situation above, if you made 20 pips, that means that if you pay a 4 pip spread, you have a total profit of 16 pips. If you are trading on a mini lot, then this means that you have made 16 in Great Britain pounds. Keep all these things in mind when trying to calculate the profits you make while trading Forex and you will be saved on the markets and will know exactly how much to expect.

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