Market prices can move quickly, especially during volatile periods. It is important to know how to calculate your potential profit and loss so you can react faster to moving market prices.
Take a look at the following examples showing how you can calculate profit and loss on your trades when you take a position with OANDA. These examples are based on holding an account where the base currency is CAD.
The current rate for USD/CAD is 1.35000/1.35015 (where 1.35000 is the sell price and 1.35015 is the buy price). The spread is 1.5 pips. Let’s say you decide to sell 10,000 USD/CAD at 1.35000.
This means you sold 10,000 USD and bought 13,500.00 CAD (10,000 USD * 1.35000= 13,500.00 CAD)
After you trade, the market rate of USD/CAD decreases to 1.34885/1.34900. You decide to buy back 10,000 USD at 1.34900 (10,000 USD * 1.34900= 13,490.00 CAD)
You sold 10,000 USD for 13,500.00 CAD and bought back 10,000 USD for 13,490.00 CAD
Your profit is 10.00 CAD (13,500.00 - 13,490.00)
Example trades are for illustrative purposes only and are not intended to be advice or a recommendation.
Let’s use the same example to see how a loss would work. The current rate for USD/CAD is 1.35000/1.35015 (where 1.35000 is the sell price and 1.35015 is the buy price). The spread is 1.5 pips. Let’s say you decide to sell 10,000 USD/CAD at 1.35000.
This means you sold 10,000 USD and bought 13,500.00 CAD (10,000 USD * 1.35000= 13,500.00 CAD)
After you trade, the market rate of USD/CAD increases to 1.35085/1.35100. You decide to cut your losses and buy back 10,000 USD at 1.35100 (10,000 USD * 1.35100= 13,510.00 CAD)
You sold 10,000 USD for 13,500.00 CAD and bought back 10,000 USD for 13,510.00 CAD
Your loss is 10.00 CAD (13,510.00-13,500.00)
Example trades are for illustrative purposes only and are not intended to be advice or a recommendation.
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