How to Calculate Forex Trading Profits and Losses - Page 2

David Waring · #11 (**permalink**) 06-07-2008, 09:38 AM

Quote:

Originally Posted by kawola17

Hey David,

I was a little confused regarding the number of contracts.

When you gave the example: "I would simply multiply the pip value of USD/CHF which as of this lesson is $9.95 by 100 which would give me $995. This is my potential profit on the trade per 1 contract. As I am trading 3 contracts I would then multiply $995 times 3 which would give me $2985 in potential profit on the trade. "

When you say 3 contracts, do you mean 3 out of the traditional 100 contracts?

Or do you mean 3 open positions with 100 contracts each, with a total of 300?

I hope that's not confusing and you understand what I'm asking.

Thanks in advance.

Sincerely,
Bill

Hey Bill,

Good to hear from you and glad to see you are making your way through the course.

What we are trading on this practice account is a contract size of 100,000 of the base currency. So when I say 1 contract I mean 100,000 of the base currency which on the platform is represented as 100K.

So if I say I am trading 1 contract of USD/CHF then I mean I am trading 100K USD against CHF.

When I say I am trading 3 contracts then I am trading 300K USD against CHF.

So to answer your question I mean 3 contracts or 300K in the above example.

Let me know if that does not answer your question or if there are any other questions on this one.

Best Regards,
Dave

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