Posted by forex at 12:22 AM
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1. Identify the contract size. A standard Forex contract consists of 100,000 units of the base currency. For example, one EUR/USD contract represents 100,000 Euros valued in terms of U.S. Dollars. A mini contract is one tenth of the size of a standard contract and represents 10,000 units of the base currency.
2. Find the pip value. For a currency pair where the U.S. Dollar is the quoted or second currency, the value of a pip is $10 for a standard contract and $1 for a mini contract. In this case, just add up the number of pips you gained or lost to find the profit or loss for a mini contract. Multiply the number of pips by 10 to find the profit or loss for a standard contract.
3. When the U.S. Dollar is the base currency, you will need to do some more calculations to figure out profit or loss. In this case, just take the take the difference between your entry price and exit price and then divide that number by the current exchange rate to find your profit or loss in dollars.For example, say you buy a standard USD/JPY contract at a price of 88 and exit the market at a price of 88.25. You've made .25 x 100,000 = 25,000 Yen. Using the current market rate to convert this amount into dollars, you get 25,000/88.25 = 283.29. In this example, you made a profit of $283.29 on your trade.