Author: Joseph Jeffriess
Below we will look at how to calculate profit and loss for both closed trades, and open trades. We will show you the formulas you will need to use, including some examples down below. Before we begin, it is important to remember the following factors about the formulas you will be using:
- For a BUY position, the open rate is the Ask price, and the close rate is the Bid price
- For a SELL position, the open rate is the Bid price and the close rate is the Ask price
P/L Calculation for trades that are closed
In order to calculate the loss or profit for trades that are CLOSED, follow the below formula:
- BUY Trade: (Close rate – Open rate) * Nominal Value = P/L
- SELL Trade: (Open rate – Close rate) * Nominal Value = P/L
P/L Calculation for trades that are open
If the trade is still OPEN, you will need to apply the same formula, however, instead of the close rate, you will need to either use the current bid price if it is a BUY position or the current ask price if it is a SELL position. In order to calculate the loss or profit for trades that are OPEN, follow the below formula:
- BUY Trade: (Current rate – Open rate) X Nominal Value = P/L
- SELL Trade: (Open rate – Current rate) X Nominal Value = P/L
Note:
Please remember that depending on the base currency of your account, you will have to apply an exchange rate to convert the P/L. Our Customers are able to use the currency exchange calculator in the Client Portal area for accurate calculations!
Example Calculations
Based on the formulas above, below are two examples to help you with your calculations. Let us say, for example, that the current exchange rate for EUR/USD is as follows:
- Bid price: 1.00165
- Ask price: 1.00175
An example P/L calculation for a BUY position:
You are looking to open a BUY position of 0.1 lots, and you would like to know the current profit or loss. From the information above, we already know both the Bid and Ask prices (which can be located on your platform), but we also need to know the nominal value.
In Forex, 1 lot is equal to 100 000 units of the base currency. Therefore, based on this information, the nominal value will be calculated as follows:
Nominal Value: 100 000 * 0.1= 10 000 EUR
This means the P/L will be:
(Close rate or Ask price – Open rate or Bid price) * Nominal Value = P/L
OR
(1.00175 – 1.00165) * 10 000 = 1 EUR
Want to know more about the Bid and Ask prices, follow the link here.
Note: Please note that depending on the base currency of your account, you will have to apply an exchange rate to convert the P/L. If your account is in USD, you have to convert the profit of 1 EUR to the current USD exchange rate. If your account is in AUD, you have to convert the amount into AUD, etc.
An example P/L calculation for a SELL position:
You are looking to open a SELL position of 0.5 lots, and you would like to know the current profit or loss. From the information above, we already know both the Bid and Ask prices (which can be located on your platform), but again, we will calculate the nominal value:
Nominal value: 100 000 * 0.5= 50 000 EUR
This means the P/L will be:
(Open rate or Bid price – Close rate or Ask price) * Nominal Value = P/L
OR
(1.00165 – 1.00175) * 50 000 = -5 EUR
Note: Please always pay attention to the base currency of your account. For example, if your account is in GBP, you will have to convert your loss of -5 EUR into GBP using the current exchange rate.
So that concludes this post on how to calculate your P/L from your trades, we hope you found it useful. Should you have any questions regarding the calculations, or anything trading-related, please do not hesitate to contact us.
