Calculating Profit & Loss on your Forex account

In the foreign exchange market, currencies are always priced in pairs, because every transaction involves selling one currency in exchange for another.

Example

When the currency pair EUR/USD is quoted at 1.3705, it indicates that one Euro is worth 1.3705 US Dollars. Every major currency pair quote reflects the value of one currency in terms of another.

The dbFX trade size is in increments of 10,000 units. A standard lot is 100K. A client can trade 100,000, 500,000 or a million units. Therefore, a client who buys ten lots of EUR/USD is buying 1,000,000 Euros by selling Dollars at $1.3705. If the client is able to sell the Euros afterwards for $1.3905 he has profited. If the prevailing foreign exchange rate for the pair falls to $1.3505, he has a loss.

Currency Pair Spread Between Bid/Ask Price in Pip Terms
EUR/USD10.00
USD/JPY8.63*
GBP/USD10.00
USD/CHF8.56*
EUR/CHF8.56*
AUD/USD10.00
USD/CAD10.07*
NZD/USD10.00
EUR/GBP20.43*
EUR/JPY8.63*
GBP/JPY8.63*
CHF/JPY8.63*
GBP/CHF8.56*

**Pips

In the foreign exchange market, every major currency but one (the Japanese yen), is quoted out to four decimal places, with the last placeholder, the ten thousandth place, called a pip. The pip value for any trade in which the US Dollar is the second currency is always $10. (For EUR/USD, 100,000 Euros X .0001 = $10.00) Therefore, in the trade above the client would have profited or lost 2000 pips, or $20,000.

When any other currency is the second currency, the pip value is 10 units (or, in the singular case of the yen, 1000 units) of the second currency. Hence, a client who buys ten lots ($1,000,000 position) of USD/CHF that is, buys US Dollars by selling Swiss francs at 1.1665 Swiss francs per Dollar, then watches the Swiss Franc move to 1.1666, has seen the value of his position increase from 1,166,500 francs to 1,166,600 francs, for a profit of 100 francs. The value of 100 Swiss francs can then be translated into its dollar equivalent: 100 / 1.1666 (approximate - depending on the prevailing market price) or $85.72 profit on this trade.

Real time profit and loss tracking

An important feature of the dbFX Trading Platform is real-time profit and loss tracking. All key information for an account is re-calculated second-by-second and updated every time exchange rates change. An Account Information window displays both Account Balance and Floating Profit and Loss. At the same time, other Trading Station windows display detailed information about every Open Position and Open Order, and summarize the Account Position and profit.