The Forex (Foreign Exchange) market is the largest and most liquid financial market in the world. Trading forex involves speculating on the price movements of currency pairs. Calculating the potential profit or loss from a trade is crucial for risk management and strategy development.
Key Concepts:
Currency Pair: A quotation of two different currencies, with the first being the base currency and the second being the quote currency (e.g., EUR/USD).
Pip: The smallest price movement a currency quote can make. For most pairs, it's the fourth decimal place (0.0001). For JPY pairs, it's the second decimal place (0.01).
Lot Size: The standard quantity of the base currency to be traded. Common sizes are:
Standard Lot: 100,000 units of the base currency.
Mini Lot: 10,000 units of the base currency.
Micro Lot: 1,000 units of the base currency.
Pip Value: The value of one pip movement for a specific lot size and currency pair. This is essential for calculating profit/loss.
Spread: The difference between the buy (ask) price and the sell (bid) price. It's a cost incurred with every trade.
Entry Price: The price at which you open your trade.
Exit Price: The price at which you close your trade.
Account Currency: The primary currency of your trading account, used for quoting profits and losses.
The Calculation Formula
The profit or loss from a Forex trade is calculated as follows:
Determine the Pip Difference: Calculate the difference between the exit price and the entry price in terms of pips. Be mindful of whether you bought (long) or sold (short) the pair.
For Major Pairs (where USD is the quote currency, e.g., EUR/USD, GBP/USD): Pip Difference = |Exit Price – Entry Price| * 10000 (for 4 decimal places)
For Pairs with JPY (e.g., USD/JPY): Pip Difference = |Exit Price – Entry Price| * 100 (for 2 decimal places)
Note: This calculator simplifies by using the absolute difference and letting the pip value calculation handle direction implicitly.
Calculate Pip Value: The pip value depends on the currency pair and the account currency.
If the quote currency is your account currency (e.g., EUR/USD with a USD account): Pip Value = (Pip Size in Decimal) * (Lot Size in Units)
If the base currency is your account currency (e.g., USD/JPY with a USD account): Pip Value = (Pip Size in Decimal) * (Lot Size in Units) / (Exchange Rate of Quote Currency to Account Currency – usually 1 if account currency matches)
If neither currency is your account currency (e.g., EUR/GBP with a USD account): Pip Value = (Pip Size in Decimal) * (Lot Size in Units) * (Exchange Rate of Base Currency to Account Currency)
This calculator uses a lookup or manual input for pip value per standard lot.
Calculate Gross Profit/Loss:
Gross Profit/Loss = (Pip Difference in Pips) * (Pip Value per Pip for your Lot Size)
Calculate Net Profit/Loss: Subtract the spread cost and any other commissions.
Net Profit/Loss = Gross Profit/Loss – (Spread in Pips * Pip Value per Pip for your Lot Size)
Example Calculation (EUR/USD, Long Trade)
Let's assume:
Currency Pair: EUR/USD
Account Currency: USD
Lot Size: 1 Standard Lot (100,000 EUR)
Entry Price: 1.12345
Exit Price: 1.12500
Spread: 1.5 Pips
Step 1: Pip Value per Standard Lot for EUR/USD (USD account):
For EUR/USD, 1 pip = 0.0001. The quote currency is USD. The pip value for 1 standard lot is typically $10.
Step 2: Pip Difference:
Since it's a long trade (buy), and the price increased: (1.12500 – 1.12345) = 0.00155. In pips, this is 0.00155 * 10000 = 15.5 pips.
Step 3: Gross Profit:
Gross Profit = 15.5 pips * $10/pip = $155
Step 4: Spread Cost:
Spread Cost = 1.5 pips * $10/pip = $15
Step 5: Net Profit:
Net Profit = $155 – $15 = $140
How This Calculator Works
This calculator simplifies the process. You select the currency pair, enter your lot size, entry and exit prices, and the spread. For common pairs, it automatically determines the standard pip value. If you choose 'Other', you'll need to manually input the pip value per standard lot. The calculator then computes the gross profit, deducts the spread cost, and displays your estimated net profit or loss in your account currency.
function getPipValuePerLot(currencyPair) {
var baseCurrency = currencyPair.substring(0, 3);
var quoteCurrency = currencyPair.substring(3, 6);
var accountCurrency = document.getElementById("accountCurrency").value;
// Pip size in decimal value
var pipDecimal = (quoteCurrency === "JPY") ? 0.01 : 0.0001;
// Standard Lot size in units
var lotSizeUnits = 100000;
// Base calculation: pip value per unit
var pipValuePerUnit;
if (quoteCurrency === accountCurrency) {
// Quote currency is the account currency (e.g., EUR/USD, GBP/USD, AUD/USD with USD account)
pipValuePerUnit = pipDecimal;
} else if (baseCurrency === accountCurrency) {
// Base currency is the account currency (e.g., USD/JPY, USD/CAD with USD account)
pipValuePerUnit = pipDecimal * lotSizeUnits / 1; // Simplified for USD pairs
} else {
// Neither is the account currency – requires a lookup or complex calculation based on cross rates.
// For simplicity, we'll assume common pairs and return a placeholder or prompt for manual input.
// Example: EUR/GBP with USD account. Pip value = pipDecimal * lotSizeUnits * (USD/GBP rate)
// This requires real-time exchange rates which are beyond this static calculator.
// We will default to returning a value that suggests manual input is needed or a common value.
// A common default for many non-USD pairs against USD might be ~10-15 if account is USD
// However, to be accurate, manual input is best.
return null; // Indicate that manual input is required
}
return pipValuePerUnit * lotSizeUnits; // Return pip value per standard lot
}
function calculateForexProfit() {
var currencyPair = document.getElementById("currencyPair").value;
var lotSize = parseFloat(document.getElementById("lotSize").value);
var entryPrice = parseFloat(document.getElementById("entryPrice").value);
var exitPrice = parseFloat(document.getElementById("exitPrice").value);
var spreadPips = parseFloat(document.getElementById("spread").value);
var accountCurrency = document.getElementById("accountCurrency").value;
var resultValueElement = document.getElementById("result-value");
resultValueElement.style.color = "#e74c3c"; // Default to red for potential loss
resultValueElement.textContent = "Invalid Input";
if (isNaN(lotSize) || isNaN(entryPrice) || isNaN(exitPrice) || isNaN(spreadPips)) {
resultValueElement.textContent = "Please enter valid numbers.";
return;
}
var pipValuePerLot;
var baseCurrency = currencyPair.substring(0, 3);
var quoteCurrency = currencyPair.substring(3, 6);
if (currencyPair === "other") {
var manualPipValue = parseFloat(document.getElementById("pipValue").value);
if (isNaN(manualPipValue)) {
resultValueElement.textContent = "Please enter Pip Value for 'Other'.";
return;
}
pipValuePerLot = manualPipValue;
} else {
pipValuePerLot = getPipValuePerLot(currencyPair);
if (pipValuePerLot === null) {
resultValueElement.textContent = "Manual Pip Value needed for this pair/account combo.";
return;
}
}
// Determine pip decimal based on quote currency
var pipDecimal = (quoteCurrency === "JPY") ? 0.01 : 0.0001;
// Calculate price difference in pips
var priceDifference = Math.abs(exitPrice – entryPrice);
var pipsDifference = priceDifference / pipDecimal;
// Calculate Gross Profit
var grossProfit = pipsDifference * pipValuePerLot;
// Calculate Spread Cost
var spreadCost = spreadPips * pipValuePerLot;
// Calculate Net Profit
var netProfit = grossProfit – spreadCost;
// Format the result based on account currency
var formattedProfit;
if (accountCurrency === "JPY") {
formattedProfit = netProfit.toFixed(0); // JPY results often shown as whole numbers
} else {
formattedProfit = netProfit.toFixed(2);
}
// Display result
resultValueElement.textContent = formattedProfit;
// Change color to green if profit
if (netProfit > 0) {
resultValueElement.style.color = "#28a745";
} else {
resultValueElement.style.color = "#e74c3c"; // Keep red for loss or zero
}
}
// Handle 'other' currency pair selection to show/hide manual pip input
document.getElementById("currencyPair").addEventListener("change", function() {
var pipValueGroup = document.getElementById("pipValueGroup");
if (this.value === "other") {
pipValueGroup.style.display = "flex";
} else {
pipValueGroup.style.display = "none";
}
});