Calculate profit and loss in Forex

The smalest movement of units in the forex calculated in points or pips. The value of each pips will vary according to type of currency pairs (pair). And the number of contract size used is in units of lots, namely:
- Standard Lot ($ 100,000)
- Mini lot ($ 10,000)
- Micro lot ($ 1000)

Rates For Direct Pair

Direct rates pair is pair with USD as the suffix (GBP/USD, EUR/USD, AUD/USD, and NZD/USD), the way of calculations is Profit / loss = (Selling Price - Purchase Price) X contract size X lot

Example 1:
Buy, 4 standard lot EUR/USD 1.2500 and Sell 4 standard lot EUR/USD 1.2570
Profit = (1.2570 - 1.2500) x 100,000 x 4
Profit = $ 2800

Example 2 :
Sell, 1 standard lot GBP / USD 2.0010, Buy 1 standard lot GBP / USD 2.0000
Profit = (1.2010 - 1.2000) x 100.000 x 1
Profit = $ 100

There are easy ways to calculate pair with the end USD :
profit 1 point for 1 standard lot (100,000) is $ 10.
profit 1 point for 1 mini lot (10,000) is $ 1
profit 1 point for 1 micro lot (1000) is $ 0.1

Rates For Indirect Pair

Indirect rates pair is pair with USD as the prefix (USD/JPY, USD/CHF, and USD/CAD). How to calculate profit / loss are as follows:

Profit / loss = (Selling Price - Purchase Price) / Price X contract size X lot

Example 1:
Buy 1 standard lot USD/JPY 110.00
Sell 1 standard lot USD/JPY 110.05
Profit = (110.05 - 110.00) / 110.05 x 100.000 x 1 = $ 45.43

Rates For Cross Currency

Cross currency rates is pairs that does not contain the USD (GBP/JPY, EUR/JPY, AUD/ PY, EUR/GBP, and GBP/CHF). How to calculate profit / loss are as follows:

Profit = (Selling Price - Purchase Price) X Rate Base Currency Current / Rate Pairs X contract size X lot
Example 1:
Sell 1 lot of standard EUR/GBP at 0.6760 price (EUR/USD is the base currency of EUR/GBP)

Buy 1 lot of standard EUR / GBP at 0.6750 price Rate EUR/USD: 1.1840
Profit = (0.6760 - 0.6750) x 1.1840 / 0.6750 x 100,000
Profit = $ 175.4

Margin & Leverage

The term margin leverage in the forex margin trading means that if you want to do trades for $ 10,000, you do not have to provide $ 10,000, but just enough providing $ 100 as a guarantee of funds to your broker, this means that leverage 1:100. The value of leverage are vary and usually in the ratio 1:50, 1:100, and 1:200
So say that you have $ 1000 in cash broker who has Leverage 1:100. This means you can trade with any amount up to approximately $ 100,000 (or nearly 100 times of your capital). This also means that to use a $ 100,000 contract size.

The advantage of the leverage is with a smaller capital you can trade with a number of contract size(lot) the same as if you do not use leverage. Or it can be said, you can use the contract size greater than not to use leverage. So with the same capital, you have a chance to get greater profit pips.

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