Understanding Forex Profit and Loss (PnL)
Knowing exactly how much you stand to win or lose on a trade is the most fundamental aspect of trading. Our Profit and Loss Calculator allows you to simulate the financial outcome of any forex or gold trade before you pull the trigger.
By inputting your entry and exit prices, lot size, and direction (Buy or Sell), you can instantly see the net PnL in your specific account currency.
The PnL Formula Explained
The basic math behind calculating profit and loss depends on the direction of your trade.
- For a Buy (Long) trade: Profit = (Exit Price - Entry Price) × Lot Size × Contract Size
- For a Sell (Short) trade: Profit = (Entry Price - Exit Price) × Lot Size × Contract Size
To make things easier, traders usually think in terms of pips. If you know the value of a pip for your lot size, the formula simplifies to:
Lot Sizes and Potential PnL
Your chosen lot size acts as a multiplier for your profit or loss. Using EUR/USD (where 1 pip = $10 on a standard lot), here is how a 50-pip move translates to real dollars:
* Notice how the exact same market movement (50 pips) can result in a $5 outcome or a $2,500 outcome simply based on position sizing.
Accounting for the Spread
The calculator computes raw profit based on exact price levels. In real trading, you must overcome the broker's spread before you break even.
If your broker charges a 2-pip spread on GBP/USD, and you aim for a 20-pip Take Profit, the market actually needs to move 22 pips in your favor. If you want to simulate this in the calculator, simply widen your entry price artificially by the spread amount.