Currency trading, commonly known as Forex (Foreign Exchange) trading, involves buying one currency while simultaneously selling another. The profit or loss in a trade is determined by the difference between the entry and exit prices, adjusted for various costs such as spread, commission, and swap fees.
Key Concepts:
Base Currency: The first currency in a currency pair (e.g., EUR in EUR/USD). It's the currency being bought or sold.
Quote Currency: The second currency in a currency pair (e.g., USD in EUR/USD). It's used to determine the value of the base currency.
Trade Size: The volume of the base currency being traded. This is often expressed in standard lots (100,000 units), mini lots (10,000 units), or micro lots (1,000 units).
Entry Price: The exchange rate at which you open your trade.
Exit Price: The exchange rate at which you close your trade.
Spread: The difference between the bid (sell) price and the ask (buy) price offered by a broker. This is a common cost of trading and is often measured in 'pips' (Price Interest Points).
Pip Value: The value of one pip movement for a specific currency pair and trade size. It's crucial for calculating profit and loss.
Commission: A fee charged by some brokers for executing a trade. It can be a fixed amount or a percentage of the trade value.
Swap/Rollover Fee: An interest adjustment applied to positions held overnight, reflecting the difference in interest rates between the two currencies in the pair.
How Profit/Loss is Calculated:
The core of profit calculation is the difference between the exit and entry prices, multiplied by the trade size and the pip value. Costs are then deducted (or added for losses).
1. Calculate Price Difference:
For a Long (Buy) Trade: Profit/Loss = (Exit Price – Entry Price)
For a Short (Sell) Trade: Profit/Loss = (Entry Price – Exit Price)
Note: This calculator assumes a Long (Buy) trade for simplicity in the main calculation. For Short trades, you would typically invert the logic or expect a negative result from the standard calculation if exit is lower than entry.
If the calculation yields a result in the base currency, it needs to be converted to the quote currency using the trade's average or exit rate. For typical Forex pairs where the quote currency is USD, the calculation is often simplified as the pip value already accounts for this.
A more precise approach involves calculating the profit in pips and then multiplying by the pip value:
Profit in Pips = (Exit Price – Entry Price) / Pip Value Unit (where Pip Value Unit is typically 0.0001 for 4-decimal currencies or 0.00001 for 5-decimal currencies)
Gross Profit/Loss (in Quote Currency) = Profit in Pips * Pip Value
4. Calculate Costs:
Spread Cost: Spread (in pips) * Pip Value
Commission Cost: Varies. If percentage: (Trade Size * Entry Price) * Commission Percentage. If fixed, it's the fixed amount per lot or per trade.
Swap Cost: The stated swap fee per day, multiplied by the number of days the trade is held.
The break-even price is the exit rate needed to cover all costs and result in a net profit of zero. It's calculated by adding the total costs (spread + commission + swap) divided by the trade size and pip value, to the entry price (for a long trade).
This means the price needs to reach approximately 1.1208 to cover all costs and break even.
This calculator helps traders quickly assess potential profitability and understand the impact of various trading costs on their bottom line.
function calculateProfit() {
var tradeSize = parseFloat(document.getElementById("tradeSize").value);
var entryPrice = parseFloat(document.getElementById("entryPrice").value);
var exitPrice = parseFloat(document.getElementById("exitPrice").value);
var spread = parseFloat(document.getElementById("spread").value);
var pipValue = parseFloat(document.getElementById("pipValue").value);
var commissionInput = document.getElementById("commission").value;
var swap = parseFloat(document.getElementById("swap").value);
var baseCurrency = document.getElementById("baseCurrency").value.trim().toUpperCase();
var quoteCurrency = document.getElementById("quoteCurrency").value.trim().toUpperCase();
var profitResultDiv = document.getElementById("profitResult");
var lossResultDiv = document.getElementById("lossResult");
var breakEvenPointDiv = document.getElementById("breakEvenPoint");
// Reset previous results
profitResultDiv.textContent = ";
lossResultDiv.style.display = 'none';
lossResultDiv.textContent = ";
breakEvenPointDiv.textContent = ";
profitResultDiv.className = "; // Reset class
// Input validation
if (isNaN(tradeSize) || isNaN(entryPrice) || isNaN(exitPrice) || isNaN(spread) || isNaN(pipValue) || isNaN(swap)) {
alert("Please enter valid numbers for all input fields.");
return;
}
// Calculate commission
var commission = 0;
if (commissionInput.includes('%')) {
var commissionPercentage = parseFloat(commissionInput.replace('%', ")) / 100;
if (!isNaN(commissionPercentage)) {
// Assuming commission is charged on the value of the trade in quote currency at entry
var tradeValue = tradeSize * entryPrice;
commission = tradeValue * commissionPercentage;
}
} else {
commission = parseFloat(commissionInput);
if (isNaN(commission)) {
commission = 0; // Default to 0 if input is invalid non-percentage
}
// If commission is given as a flat fee per unit or per lot, this calculation needs adjustment.
// For this calculator, we assume it's a total flat fee or a percentage.
// If it's a percentage, we calculated it above. If it's a flat fee, this part needs more specific handling.
// For now, if it's NOT a percentage, we assume it's a flat fee in quote currency.
// However, the input example is "0.05%", so let's stick to percentage interpretation primarily.
// Re-evaluating: The prompt example is "0.05%". Let's prioritize percentage. If it's just a number without %, it's ambiguous.
// Let's assume if it's not a '%' it's a flat fee in quote currency for simplicity.
if (!commissionInput.includes('%') && !isNaN(parseFloat(commissionInput))) {
commission = parseFloat(commissionInput);
}
}
// Ensure commission is a number
if (isNaN(commission)) {
commission = 0;
}
var priceDifference = exitPrice – entryPrice;
var grossProfit = priceDifference * tradeSize; // This is profit in base currency units if calculated directly
// A more standard Forex calculation uses pips and pip value
var pipDifference = Math.abs(exitPrice – entryPrice) / pipValue; // Difference in pips
var grossProfitQuoteCurrency = pipDifference * pipValue; // This is not correct. PipValue is usually quoted per unit of base.
// Correct Calculation:
// Gross Profit/Loss = (Exit Price – Entry Price) * Trade Size (in base currency)
// This result is in terms of the Quote Currency because the price is Base/Quote
var grossProfitFinal = (exitPrice – entryPrice) * tradeSize;
// Costs in Quote Currency
var spreadCost = spread * pipValue * (tradeSize / (pipValue / 0.0001)); // Cost of spread in quote currency (adjusting for pip calculation)
// A simpler way to calculate spread cost: if pip value is $10 for 1 pip, then spread cost is spread_pips * pip_value_per_pip_unit_of_trade_size
// If pipValue is $0.0001 for 1 unit of base currency, and trade size is 100,000 units:
// Pip movement value = pipValue * tradeSize. E.g. 0.0001 * 100000 = $10.
// So spread cost = spread_pips * (pipValue * tradeSize) ??? This seems wrong.
// Let's use the definition: Pip Value is the monetary value of one pip movement for your trade size.
// Example: EUR/USD, 1 standard lot (100,000 EUR). Pip Value is $10.
// A 10 pip move means 10 * $10 = $100 profit/loss.
// If Entry=1.1200, Exit=1.1250 -> 50 pip move. Gross Profit = 50 * $10 = $500.
// Spread = 2 pips. Spread Cost = 2 pips * $10/pip = $20.
// Commission = 0.05% of trade value. Trade Value = 100,000 EUR * 1.1200 USD/EUR = $112,000. Commission = 0.0005 * $112,000 = $56.
// Swap = $2.
// Net Profit = $500 – $20 – $56 – $2 = $422.
// Recalculate based on this understanding:
// First, determine the actual value of one pip movement.
// If pipValue is given as the unit price change (e.g., 0.0001), then the value of a pip is pipValue * tradeSize.
var valueOfOnePipMovement = pipValue * tradeSize; // e.g., 0.0001 * 100000 = 10 (if quote is USD, this is $10)
var priceChange = exitPrice – entryPrice;
var grossProfitFinalCorrected = priceChange * tradeSize; // This is direct calculation. Let's stick to pip based.
// Calculate profit/loss in pips first
var priceChangePips = (exitPrice – entryPrice) / pipValue; // This assumes pipValue is the increment of price change (e.g. 0.0001)
// If pipValue is given as the actual monetary value per pip (e.g., 10 USD), then this calculation needs adjustment.
// The input field `pipValue` is labeled "Pip Value (in Quote Currency for 1 unit of Base)". This implies it's the rate, e.g. 0.0001.
// So, pipDifference should be calculated based on the standard pip increment (e.g. 0.0001 for 4-digit prices).
// Let's assume the standard pip increment is derived from the pipValue input.
// A common way pipValue is defined is the monetary value of ONE pip for ONE unit of base currency.
// Example: EUR/USD. Pip value for 1 EUR could be $0.0001. For 100,000 EUR trade, it's $10.
// Let's assume the `pipValue` input is the monetary value of one pip for the specified `tradeSize`.
// Example: If trade size is 100,000 EUR, and pip value is $10, then input pipValue should be 10.
// This contradicts the example "0.0001". This means `pipValue` is the unit price change that represents 1 pip.
// REVISED LOGIC based on typical Forex input interpretation:
// `tradeSize`: Units of Base Currency (e.g., 100,000 EUR)
// `entryPrice`, `exitPrice`: Rate (e.g., 1.1200 means 1 EUR = 1.1200 USD)
// `spread`: In Pips (e.g., 2 pips)
// `pipValue`: Monetary value of ONE pip for the given trade size (e.g., $10 USD for 100,000 EUR)
// `commission`: Percentage or flat fee. Example "0.05%" implies percentage.
// `swap`: Monetary value in Quote Currency.
// Let's adjust the input labels and logic if the example `pipValue=0.0001` is to be taken literally as the increment.
// If pipValue = 0.0001 is the unit increment for a pip:
var pipIncrement = pipValue; // e.g. 0.0001
var actualPipValuePerPip = pipIncrement * tradeSize; // e.g. 0.0001 * 100000 = 10 USD
var priceDifferenceAbsolute = exitPrice – entryPrice;
var grossProfitAbsolute = priceDifferenceAbsolute * tradeSize; // This IS the profit/loss in quote currency.
// Calculate costs in quote currency
var spreadCostAbsolute = spread * actualPipValuePerPip;
var commissionCostAbsolute = 0;
if (commissionInput.includes('%')) {
var commissionPercentage = parseFloat(commissionInput.replace('%', ")) / 100;
if (!isNaN(commissionPercentage)) {
var tradeValueQuoteCurrency = tradeSize * entryPrice; // Value of trade in quote currency
commissionCostAbsolute = tradeValueQuoteCurrency * commissionPercentage;
}
} else {
// Assume flat fee if not percentage
commissionCostAbsolute = parseFloat(commissionInput);
if (isNaN(commissionCostAbsolute)) {
commissionCostAbsolute = 0;
}
}
var swapCostAbsolute = swap; // Assuming swap is already in quote currency
var netProfitLoss = grossProfitAbsolute – spreadCostAbsolute – commissionCostAbsolute – swapCostAbsolute;
// Display Results
var profitDisplay = "";
var lossDisplay = "";
if (netProfitLoss >= 0) {
profitDisplay = parseFloat(netProfitLoss.toFixed(2)) + " " + quoteCurrency;
profitResultDiv.textContent = profitDisplay;
profitResultDiv.className = 'profit'; // Add class for styling
} else {
lossDisplay = parseFloat(netProfitLoss.toFixed(2)) + " " + quoteCurrency;
lossResultDiv.style.display = 'block';
lossResultDiv.textContent = lossDisplay;
lossResultDiv.className = 'loss'; // Add class for styling
profitResultDiv.className = 'loss'; // Also apply loss style to the main result area if negative
}
// Calculate Break-Even Point
var totalCosts = spreadCostAbsolute + commissionCostAbsolute + swapCostAbsolute;
var breakEvenPrice = entryPrice + (totalCosts / tradeSize);
if (baseCurrency && quoteCurrency) {
breakEvenPointDiv.innerHTML = "To break even, your exit price needs to be approximately: " + breakEvenPrice.toFixed(Math.max(4, pipValue.toString().length – 2)) + " " + quoteCurrency + " per " + baseCurrency + ".";
} else {
breakEvenPointDiv.innerHTML = "To break even, your exit price needs to be approximately: " + breakEvenPrice.toFixed(Math.max(4, pipValue.toString().length – 2)) + ".";
}
// Adjust formatting for potential loss display
if (netProfitLoss < 0) {
profitResultDiv.style.display = 'none';
lossResultDiv.style.display = 'block';
} else {
profitResultDiv.style.display = 'block';
lossResultDiv.style.display = 'none';
}
}