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Examples of a forex trade

 

EUR/USD is trading at 1.17560 (sell price) / 1.17580 (buy price)

You decide to buy €50,000 at 1.17580 because you think the price of EUR/USD will go up.

Your pip value in this example will be 0.0001 x 50.000 = $ 5

Example 1: Winning Trade

You were correct with your prediction and the price goes up to 1.18160/1.18180 and you decide to close your winning trade by selling at 1.18160 (current sell price)

The price of EUR/USD went up 58 pips (1.18160 – 1.17560 ) in your favor.

Your profit is ([€50,000 x 1.18160] – [€50,000 x 1.17580])= $290

Alternatively, you can calculate your profit by multiplying the pip value with the number of pips it moved, i.e. your profit is 58 pips x $5 = $290

Example 2: Losing Trade

Your prediction was wrong and price of EUR/USD dropped down over the next hours to 1.17000 / 1.17020, you assume that the drop of the price will continue and you decide to close the trade at 1.17000 (current sell price) to limit your losses.

The price of EUR/USD dropped down 58 pips (1.17580 – 1.17000) against you.

Your loss is ([€50,000 x 1.17580] – [€50,000 x 1.17000])=  - $290 

Alternatively, you can calculate your loss by multiplying the pip value with the number of pips it moved, i.e. your loss is [58 pips x (-$5)] = - $290

Please note, profit and loss amounts given in the examples don’t include FX calculation charges, commissions (depends on account type) and overnight swap charges (may be credited or debited to your account depending on trade). 

For further detailed calculations, please consult your personal account manager.

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