Profit or loss calculation

Profit or loss calculation If you have bought the goods (currency) at one price, then

have sold it at another one, then the profit or loss will make a difference between the price of sale

and purchase of the transaction multiplied by the sum of the transaction. Profit or loss=

Transaction sum * (Sell price – Buy price)

In a general view the formula of calculation of the profit and losses looks as follows:

Profit/Loss = N lots*100000*(Sell–Buy) – Nlots* Commission –N

lots*100000*Overnight*Ndays/365,

where N lots – quantity of lots 100 000each, used by trader

Sell – sell price of base currency

Buy – buy price of base currency

Spread – the commission raised by the dealing company

Overnight – difference in interest rates between base currency and counter currency for

operations Sell or Buy, depending on operations made by the trader. It is raised only in a case if

trader has not had time to close a position the same day. It can be positive (it is paid due to the

trader), and negative (is paid extra to the trader) Ndays – Quantity of days the trader has closed a

position within.

Possible profit or the loss (Unrealized P/L)

If you have an open position, you will have a necessity of possible profit or loss

calculation during concrete moments of time as rate constantly changes. While the position is not

closed, the profit or loss data is not finalized and refer to floating (possible or unrealized). If you

close your position during this moment at this rate you will receive such profit or loss. Same

formula should be used for calculation of possible profit or loss

You can carry out an output on FOREX only through the intermediary. The commission

house or the dealing center could be such intermediary. These organizations give you an

opportunity to use one of computer information systems such as Dow Jones Telerate, REUTERS

and have the allocated telephone or computer channel with the broker that gives you the

quotation of currency and you can make operations through. You also can directly work with the

commercial bank or the broker house. At the second variant you reduce the quantity of

intermediaries between you and FOREX that allows receiving more favorable operating

conditions. Even if you are so solvent and presume to buy and pay to yourself monthly services

of one of the information systems, the output on the active market participant (market-maker)

giving you the price for transactions is necessary for you either way.

The prices you see on the computer screen are the prices of real FOREX transactions. The

prices constantly change. Therefore you cannot simply call the broker and order operation under

the price convenient for you as this price can not suit him. Before you make a deal you request

for the price and can buy or sell only at the price given to you by broker. Firstly, do not forget

that you are a passive participant of the market and cannot establish the price. Secondly, the

broker will give you quotation poorly distinguished from what you see on the computer screen.

You should specify what operation we want to make - purchase or sale at the closing or opening

of a position. The commands Buy (to buy) or Sell (to sell) are used for this purpose