# How do I calculate Profit

Discussion in 'Beginners Bootcamp' started by knightal, Apr 8, 2010.

1. ### knightal Private, 1st Class

Joined:
Mar 13, 2010
Messages:
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0
Hi
I'm new to FX and on a steep learning curve so hopefully someone can help with my problem.

Below is a section taken from my demo account on the MT4 platform.

I am testing an EA and am wondering if any one can tell me where my calculations are wrong.

If (T/P) minus (price) = pips then in this case
33310 - 33239 = 71 pips @.10 = \$7.10.

So how do I get \$7.66 as shown below.

Ticket:23224373
OpenTime:2010.04.08 03:17
Size:0.10
Item:eurusd
Price:1.33239
S/L:1.32240
T/P:1.33310
CloseTime:2010.04.08 04:19
Price:1.33310
Commission:0.00
Taxes:0.00
Swap:0.00
Profit:7.66

I know I'm missing something here. Maybe my maths are crap, but if you can show me the error of my ways I will be greatfull
Thanks
Regards
Allan

2. ### Stony Sergeant

Joined:
Mar 21, 2009
Messages:
167
2
Well, you didn´t make 71 Pips, but just 8. Pips are calculated on the basis of the 4th digit only: 1,331 - 1,3323 = 8

By the way: I don´t understand what 5 digits are good for, too.

3. ### knightal Private, 1st Class

Joined:
Mar 13, 2010
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Thanks Stony
I use MT4 as supplied by FXCM Australia and they use 5 digits. Likewise I'm not yet sure why this is so. The sales pitch says it is something to get tighter spreads.

***Warning dumb question following***

So if I made only 8 pips, how do I get a profit of \$7.66 when I.m trading at 0.10 should this not equal .80 cents.

4. ### knightal Private, 1st Class

Joined:
Mar 13, 2010
Messages:
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Hmmmm.... I just went and searched on google for calculation profit and found a profit calulator which gave my result as \$7.65 using the formular below.

(Closing Rate - Opening Rate) * (Closing {quote}/{home currency}) * Units

I just knew it would be more involved than I thought. :embarrassed:

We once had a Prime Minister who said "Life was not meant to be easy"
I guess he was right.

5. ### Stony Sergeant

Joined:
Mar 21, 2009
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Not a dumb question...! Maybe they have some special way to calculate the pips. Ask their support!

6. ### Tyrion Private

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Mar 16, 2010
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no it's not dumb at all, thank you!

7. ### RahmanSL Major

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Jan 16, 2010
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Gulp! You mean we are supposed to calculate our profits kah?...Oh, I see!...hmmmm, all along I thought the MT4 platform does that “automatically” for us!

Knightal, you are much smarter and conscientious for details than…ehhh…a lot of us here (including a whole bunch of seasoned Traders). So, “Bravo” for bringing this up!....now, what’s the value of “pi” again?...hmmmm!!

Joined:
Dec 23, 2009
Messages:
393
1
I see that your deal was EUR/USD, but for newbies, you should know 1 pip isn't necessarily 1 USD. In non-US cross pairs it varies. In EUR/GBP it's over a dollar per pip.
That also means if your account balance is in EUR or something, you'll get other magic happening.
It might also be slippage in your favor.

9. ### Pharaoh Colonel

Joined:
Oct 3, 2007
Messages:
19,679
2,229
Slippage wouldn't cover it. That would be reflected in the closing price.

Unless your account isn't in USD, this definitely is something you should have a chat with the broker about. Make them show you the math.

10. ### knightal Private, 1st Class

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LOL Yeah I was the kid who pulled the alarm clock appart to see how it worked. but hey I also had to put it back to-gether again.

Thanks you guys for the info and the humor

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