Please keep in mind that the trading platform (Global Forex Trading) automatically does a real time profit and loss calculation.
The equation for EUR/USD, GBP/USD, and AUD/USD [direct currency pairs] is as follows:
P / L = ( closing rate - opening rate ) x lot size x number of lots
The equation for USD/JPY, USD/CHF and USD/CAD [indirect currency pairs] is as follows:
P / L = ( closing rate - opening rate ) / closing rate x lot size x number of lots
In a 100,000 units/contract size account, 1 pip results $10 profit/loss in EUR/USD, GBP/USD, AUD/USD, approximately $9 in USD/JPY, and $8 in USD/CHF.
In a 10,000 units/contract size account, 1 pip results $1 profit/loss in EUR/USD, GBP/USD, AUD/USD, approximately $0.9 in USD/JPY, and $0.8 in USD/CHF.
Calculation Example:
The current bid/ask price for EUR/USD is 1.2320/1.2323, meaning to purchase every unit of Euro, you need 1.2323 units of U.S. Dollar or sell every unit of Euro, you need 1.2320 units of U.S. Dollar.
Let's assume that you decide the U.S. Dollar is undervalued against Euro. To profit from your strategy, you would buy U.S. Dollar (sell Euro) at 1.2320. Thus when the price of U.S. Dollar rises, you would sell U.S. Dollar (purchase Euro) for a profit.
You sold 100,000 units of Euro at 1.2320.
Some time later, EUR/USD price is at 1.2357/1.2360 just like you expected. So you decide to sell U.S. Dollar (purchase Euro) or close your position for a profit.
In this scenario, your profit is 1.2360 - 1.2320 = 40 pips.
Equation: (1.2360 [ closing rate ] - 1.2320 [ opening rate ] ) x 100,000 [ unit / lot ] x 1 [ lot ] =
$400 [ profit ]
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