The examples provided demonstrate how to determine profit and loss for trades based on the position taken.

Imagine you purchase Euros at a rate of $1.1251 per Euro and later sell them at $1.1261 per Euro, with a transaction size of 100,000 Euros. The profit or loss can be computed using this formula:
(Price at which the base currency is sold – Price at which the base currency is bought) X Transaction size = Profit or Loss.

This is the same formula used by our Calculator.

In our illustration:

($1.1261 – $1.1251) X 100,000 = $100

Thus, from this trade, you’d earn a profit of $100.

Consider another scenario. Let’s say you trade in EUR/USD and the Euro is priced at $1.3646 per Euro with a transaction size of 100,000 Euros. However, the EUR value drops to $1.3616. Using the formula we’ve discussed, you can deduce that this transaction would result in a $300 loss:

($1.3616 – $1.3646) X 100,000 = -$300

To compute the unrealized gains or losses on active trades, replace the selling price in the formula with the current bid or ask rate for the trade’s closure action.

For example, if you purchased 100,000 Euros at 1.1374 and the current bid rate stands at 1.1363, you’d have an unrealized loss of $110:

($1.1363 – $1.1374) X 100,000 = -$110

Remember to factor in dealer commissions or any additional fees. Deduct these from your profits or add to your losses for an accurate net result.

As demonstrated, the forex profit and loss calculation isn’t complicated. Nevertheless, we recommend using our calculator to eliminate potential errors when ascertaining profit or loss. We trust that this tool will assist you in making judicious trading decisions. Always be mindful of potential risks to your capital.