For Business

Trading Math

How to Calculate Profit and Loss

Profit or loss is the difference between the price you got out at and the price you got in at, multiplied by the units, with the sign set by the direction. This paper shows you the sum on one real trade, works it on the two real days as a buy and as a sell so the signs make sense, takes off the costs that come between the gross number and the statement, and reads the same sum off the History tab of your platform.

Difficulty
Beginner
Reading time
5 min
Pages
7
Reviewed by
Saman Rahbar

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Two prices and a multiplication

Every closed trade has a price in and a price out, and the profit is the difference between them multiplied by the number of units traded. A lot is 100,000 units of the currency on the left of the pair, and a pip is the fourth decimal place of the price. On 3 September 2026 one lot of the euro against the dollar was bought at the open, 1.15872, and sold at the close, 1.16259. The difference is 0.00387; times 100,000 units, that is 387 dollars, in dollars because the price is written in dollars. The short way is the same sum: 38.7 pips at ten dollars a pip.

Four trades, four signs

The only thing that trips people up is the sign on a sell. A buy makes money when the price rises, so its profit is the price out minus the price in. A sell makes money when the price falls, so its profit is the price in minus the price out. On the two real days that gives four results from two differences: 3 September rose 0.00387, so a buy made $387 and a sell lost $387; 28 August fell 0.00710, so a buy lost $710 and a sell made $710. Same size, same two days, and the direction alone sets the sign.

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