Profit/loss Calculation With Sigma Forex

what is a Pip (or point)?

The
term used in the currency market to represent the smallest incrementalmove an exchange rate can make. Depending on context, normally onebasis point (0.0001 in the case of EUR/USD, GBP/USD, USD/CHF and 0.01 in the case of USD/JPY).

How do I Calculate Profit/Loss?

The equation for EUR/USD, GBP/USD, and AUD/USD is as follows:P/L = (Opening Rate - Closing Rate) x Lot Size x Number of Lots

The equation for USD/JPY, USD/CHF and USD/CAD is as follows:P/L = (Opening Rate - Closing Rate) / closing Rate x Lot Size x Number of Lots

For a standard account, 1 pip results in a $10 profit/loss in EUR/USD and GBP/USD, approximately $9 in USD/JPY, and $8 in USD/CHF.

For a mini account, 1 pip result in a $1 profit/loss in EUR/USD and GBP/USD, approximately $0.9 in USD/JPY, $0.8 in USD/CHF.

Example

The current bid/ask price for USD/CHF is 1.5455/1.5458, meaning you can buy $1 US for 1.5458 Swiss Francs or sell $1 US for 1.5455.

Suppose you decide that the US Dollar (USD) is undervalued against the Swiss Franc (CHF). To execute this strategy, you would buy Dollars (simultaneously selling Francs), and then wait for the exchange rate to rise.

So
you make the trade: purchasing US$100,000 and selling 154,550 Francs.(Remember, at 1% margin, your initial margin deposit would be $1,000.)

As you expected, USD/CHF
rises to 1.5568/15571. You can now sell $1 US for 1.5568 Francs or buy$1 US for 1.5571 Francs. Since you bought Dollars and sold Francs inyour previous trade, you must now sell Dollars for Francs to realizeany profit. If you sell US$100,000 at the current USD/CHF rate of 1.5568, you will receive 155,680 CHF.

Since you originally sold (paid) 154,550 CHF, your profit is 1130 CHF. To calculate Dollar-based P&L, simply divide 1130 by the current USD/CHF rate of 1.5568.

Total profit = US $725.85

If you had done the opposite to initiate the trade (sold Dollars and bought Francs) you would have lost the same amount of money.