Trader's Calculator

• Initial Data

How are the value of one point and the size of profit/loss calculated for the Forex market, CFDs and Gold (spot)?

Important:

• 1. For ease of calculating the value of one point we recommend to use the trader’s calculator;
• 2. For the Forex instruments with 5 (0.00001) and 3 (0.001) decimal one point value equals to the change of the 4th (0.0001) and 2nd (0.01) decimal respectively.

Let’s calculate the value of one point for 1.43 lot, for example, for the currency pair GBPCHF. Let’s suppose that we open a Buy position of 1.43 lot, at the price 2.35330 and close the opened position at the price 2.35340 (1 point = 2.35340 - 2.35330 = 0.00010).

Let’s consider the formula of calculating the value of one point:
OnePointValue = (Contract * (Price + OnePoint)) - (Contract * Price), where:

• OnePointValue –the value of one point in the quote currency;
• Contract – the size of the contract in the base currency;
• Price – the price of the currency pair;
• OnePoint – is the smallest price increment a currency can make (one pip);

The quote currency is the second currency in the quotation, for example:

• EURUSD – the quote currency USD;
• GBPCHF – the quote currency CHF;
• EURGBP – the quote currency GBP.

• Read Close 1

  Example. Calculating the value of one point in GBPCHF on a trading account with USD deposit currency

  Lot = 1.43;
  Trading instrument (currency pair) – GBPCHF;
  Rate of GBPCHF = 2.3533;
  Contract = 143 000 GBP;
  Rate of USDCHF = 1.1659 (it is necessary to recalculate the value of one point into the deposit currency).

  Calculating:

  • 1. OnePointValue = (143 000 * (2.3533 + 0.0001)) - (143 000 * 2.3533) = 336536.2 – 336521.9 = 14.3 CHF;
  • 2. Now we convert the value of one point into the deposit currency (USD). If USD is the first in the currency pair for which we are making conversion, then the value of the point should be divided by the rate, otherwise it should be multiplied:
    OnePointValue = 14.3 CHF / 1.1659 = 12.27 USD.

  As a result the value of one point in GBPCHF is equal to 12.27 USD.

  In order to know the value of one point for Gold (spot), CFDs on US shares and Futures which is fixed, refer to Contract specification, and click on the instrument you are interested in. The calculation of the value of one point for the abovementioned instruments and for other currency pairs on the Forex market is made similarly.

Now let’s consider calculating profit/loss.

The formula of calculation is the following:
For Buy position:
Profit/Loss = (Contract * ClosePrice) - (Contract * OpenPrice),
For Sell position:
Profit/Loss = (Contract * OpenPrice) - (Contract * ClosePrice), where:

• Profit/Loss – profit/loss in the quote currency;
• Contract – the size of the contract in the base currency;
• ClosePrice – the closing price of the currency pair;
• OpenPrice – the opening price of the currency pair.

• Read Close 2

  Example. Calculating profit/loss for a Sell position in EURGBP on a trading account with the deposit currency USD:

  Lot = 0.19;
  Trading instrument (currency pair) – EURGBP;
  OpenPrice EURGBP = 0.6983;
  ClosePrice EURGBP = 0.6883 (100 pips = 0.6983 - 0.6883 = 0.0100);
  Contract = 19 000 EUR;
  Rate of GBPUSD = 2.0256 (it is necessary for converting the size of profit/loss into USD).

  Calculation:

  • 1. Profit/Loss = (19 000 * 0.6983) - (19 000 * 0.6883) = 13267.7 – 13077.7 = 190 GBP;
  • 2. Now we convert the size of profit/loss into USD.If USD is the first in the currency pair for which we are making conversion, then the size of profit/loss should be divided by the rate, otherwise it should be multiplied:
    Profit/Loss = 190 GBP * 2.0256 = 384.86 USD.

  Profit/loss for Gold (spot), СFD on Shares, Futures and other currency pairs is calculated similarly.

I can’t open a position, the terminal shows « Not enough money». How can I calculate the sum of free funds needed to open a position?

Note: For ease of calculating margin requirements we recommend to use the trader’s calculator. Below it is shown how to calculate margin requirements for the Forex market and for CFD on US Shares and Futures.

Before calculating margin requirement for opening a position it is necessary to take into account the type of the trading account on which the transaction is made.
On the accounts of the type alpari.micro and alpari.classic the leverage is – 1:500.
On the accounts of the type alpari.pamm the leverage is – 1:100.

Let’s consider the formula of margin calculation in the base currency:
Margin = Contract / Leverage, where:

• Margin – is the collateral;
• Base currency – the currency quoted first in the pair, for example:
  • EURUSD – the base currency is EUR;
  • USDJPY – the base currency is USD;
  • GBPJPY – the base currency is GBP.
• Contract –the contract size in the base currency. The size of 1 lot is always 100 000 units of the base currency. Consequently 0.1 lot = 100 000 * 0.1 = 10 000 in base currency, and 0.01 lot = 100 000 * 0.01 = 1 000 in base currency;
• Leverage, for example:
  • leverage 1:500 – 500
  • leverage 1:100 – 100.

After calculating margin in the base currency it is necessary to convert it into the deposit currency (at the rate of the position opening), i.e. USD, EUR.

• Read Close 1

  Calculation of margin on an account of the type alpari.pamm.

  Calculation of margin on an account of the type alpari.micro with the deposit currency USD:
  Trading instrument (Currency pair) – EURUSD;
  Base currency – EUR;
  Lot = 0.1;
  Contract = 10 000 EUR (100 000 * 0.1 lot);
  Leverage = 1:100 (100);
  The rate of EURUSD at the position opening = 1.3540;
  Deposit currency – USD.

  Calculation:

  • 1. Margin = Contract / Leverage = 10 000 EUR / 100 = 100 EUR;
  • 2. Then we convert it into the deposit currency (the USD). If the dollar in the currency pair under consideration is the first one then the pip value should be divided by the rate, otherwise it should be multiplied:
    Margin= 100 EUR * 1.3540 = 135.40 USD.
    Margin is equal to 135.40 USD.
• Read Close 2

  Calculation of margin on the CFD (shares, futures).

  Let’s consider how to calculate margin needed to open a position for CFD (US shares and Futures). For CFD on US shares leverage is 1:10.

  Let’s consider the formula of calculating margin for US shares:
  Margin = (Contract * Рrice) / Leverage, where:

  • Margin – is collateral;
  • Contract – the volume of contract. 1 lot is always 100 shares. Consequently 0.1 lot = 100 * 0.1 = 10 shares;
  • Рrice – the price of CFD at the position opening;
  • Leverage 1:10 – 10.

• Read Close 3

  Example. Calculation of margin on an account of the type alpari.classic.

  Calculation of margin on an account of the type alpari.classicwith the deposit currency USD:
  Trading instrument (CFD) – #GM (General Motors);
  Lot = 0.1;
  Contract = 10 shares (100 * 0.1 lot);
  Leverage = 1:10 (10);
  The rate of #GM at the position opening = 31.03;
  Deposit currency – USD.

  Calculation:

  • Margin = (Contract * Рrice) / Leverage = (10 shares * 31.03) / 10 = 31.03 USD;
    Margin is equal to 31.03 USD.

Margin on CFDs on Futures is fixed. It is provided on our web-site at Contract Specification page.

I am a Forex trader. What happens with my position in the FOREX and CFD markets overnight?

We use swaps to roll over open positions overnight in the Forex and CFD markets. They can be both negative and positive depending on the difference of interest rates. The sum, credited/debited as a pay for rolling over a position is called storage. The final sum of the swap depends on many factors, such as current interest rates in different countries, movement of the estimated pair, forward market conditions, dealer's expectations and swap-points of broker's counteragent. Below theoretical basis for market swaps calculations are provided.

Important: To simplify swap calculation it is recommended to use Trader's Calculator.

Let's suppose that the interest rate of the European Central Bank (ECB) is 4.25%, and the FED interest rate is 3.5% per annum. Let's assume that you have a short position (Sell) on EURUSD per 1.0 lot. So, you have to sell 100 000 EUR. That is, you have to borrow them at the rate of 4.25%. By selling the Euro you buy US Dollars, which are deposited at the rate of 3.5%. If the interest rate of the country the currency of which you have bought (USD – 3.5%), is more than the interest rate of the country the currency of which you have sold (EUR – 4.25%), the swap expressed in the deposit currency will be credited to the trading account, otherwise it will be debited. It should be also mentioned that a swap also includes broker's rollover commission.

In all, your expenses on the transaction will be equal to 1% annual (the difference between the interest rates «InterestRateDifferential» = 4.25% - 3.5% = 0.75%) plus broker's commission for transferring your position to the next day (e.g. 0.25%). Then it is necessary to covert a swap value from annual percents into the deposit currency.

• Read Close 1

  Example 1 . Short positions (Sell) transferring to the next day in the Forex market:

  As you buy a currency with a lower interest rate (USD – 3.5%) than you sell (EUR – 4.25%), the swap will be debited from the trading account.

  Let's consider the formula:
  SWAP = (Contract * (InterestRateDifferential + Markup) / 100) * Рrice / DaysPerYear, where

  • Contract = 100 000 EUR (1 lot);
  • Рrice = 1.3500 – current market price of the currency pair (EURUSD);
  • InterestRateDifferential = 0.75% – the difference between the interest rates of the countries;
  • Markup = 0.25% – broker's commission;
  • DaysPerYear = 365 – number of days in a year.

  Calculation:

  • 1. SWAP = (100 000 * (0.75 + 0.25) / 100) * 1.3500 / 365 = 3.70 USD;
  • 2. If RUR is a deposit currency a swap should be converted from USD into RUR at USDRUR rate at the moment of swap crediting/debiting. That is 3.70 USD should be multiplied by the current rate of USDRUR, e.g. 25.80. In this case SWAP = 3.70 * 25.80 = 95.46 RUR.

  That is, when the open short position (EURUSD) is transferred to the next day either 3.70 USD or 95.46 RUR, depending on the deposit currency, will be debited from your trading account from each lot.

• Read Close 2

  Example 2. Long position (Buy) transferring to the next day in the Forex market:

  If you have a long position (EURUSD) a swap will be credited to your trading account, as you have bought a currency with a higher interest rate (EUR – 4.25%) than sold (USD – 3.5%).

  The formula for swap calculation:
  SWAP = (Contract * (InterestRateDifferential - Markup) / 100) * Рrice / DaysPerYear.

  Calculation:

  • 1. SWAP = (100 000 * (0.75 - 0.25) / 100) * 1.3500 / 365 = 1.85 USD;
  • 2. SWAP = 1.85 * 25.80 = 47.73 RUR.

  That is, when an open long position (EURUSD) is transferred to the next day either 1.85 USD or 47.73 RUR, depending on the deposit currency, will be credited to your trading account from each lot.

Sometimes the difference between interest rates does not exceed broker's commission. In this case a swap is debited from a trading account for long (Buy) and short (Sell) positions.

Swap-points table is given on our web-site at page Contract specification. In the table a swap is expressed in points. In order to convert points into the deposit currency a swap value from the Specifications should be multiplied by 1 pip value of the currency you need.

Note: Storage for transferring your position from Wednesday to Thursday is credited/debited threefold as the value date for the position opened on Wednesday is Friday. When the position is rolled over from Wednesday to Thursday the value date increases not for one day but for three days and it becomes Monday. That’s why storage from Wednesday to Thursday is debited/credited threefold.

Let's consider how open positions are rolled over in the CFD on shares market.

We can say that a contract for difference can be qualified as shares purchasing on the proceeds of the credit. If you trade CFD you get all the benefits of the underlining share, including price rise and dividends, and pay off on-credit expenditures to the seller. It's a kind of a bank credit: you borrow money to buy shares and get the benefits of a shareholder and bank takes an interest. CFD presents this process as a single deal. And other way around if you sell shares.

• Read Close 3

  Example 3 . You buy CFD on shares or ETF:

  If you haven't closed your Buy position before a trading session ends you should pay for the granted credit on the basis of the FED Funds Rate (for shares), close price of the share and broker's rollover commission to figure out a swap.

  Let's suppose that the FED Funds rate is 4.75%, and the close price of Microsoft shares is 25.00 USD. Then you have to pay for the granted credit.

  Let's consider the formula:
  SWAP = (Contract * РriceClose * (IntrestRate + Markup) / 100) / DaysPerYear, where:

  • Contract = 100 shares (1 lot);
  • РriceClose = 25.00 – close price (Microsoft);
  • InterestRate = 4.75% – FED Funds Rate — for shares;
  • Markup = 1.25% – broker's commission;
  • DaysPerYear = 365 – number of days per year.

  Calculation:

  • 1. SWAP = (100 * 25.00 (4.75 + 1.25) / 100) / 365 = 0.41 USD;
  • 2. SWAP = 0.41 * 25.80 = 10.58 RUR.

  Then when transferring an open long (Buy) position on Microsoft shares to the next day either 0.41 USD or 10.58 RUR will be debited from your trading account depending on the deposit currency.

• Read Close 4

  Example 4. You sell CFD on shares or ETF:

  If you haven't closed your Sell position before a trading session ends you will be credited some sum of money on the basis of the FED Funds Rate (for shares), close price of the sold shares and broker's rollover commission.

  Let's suppose that the FED Funds rate is 4.75%, and the close price of Microsoft shares is 25.00 USD.

  Let's consider the formula:
  SWAP = (Contract * РriceClose * (IntrestRate - Markup) / 100) / DaysPerYear.

  Calculation:

  • 1. SWAP = (100 * 25.00 (4.75 - 1.25) / 100) / 365 = 0.24 USD;
  • 2. SWAP = 0.24 * 25.80 = 6.19 RUR.

  hen transferring an open short (Sell) position on Microsoft shares to the next day either 0.24 USD or 6.19 RUR will be credited to your trading account depending on the deposit currency.

Sometimes the Fed interest rate does not exceed broker's commission. In this case a swap is debited from a trading account for long (Buy) and short (Sell) positions.

Swap-points table is given on our web-site at page Contract specification.

Note: that the interest «paid» for the position left open from Friday to Monday is three times higher as your position is credited for 3 days.

Rollover of open positions on CFD on futures.

When open positions on CFD on futures are rolled over overnight a storage is not credited/debited.

Rollover of open positions on Gold (Spot).

Swap on Gold (spot) is calculated like the one on CFD on shares.

Note: Storage for transferring your position from Wednesday to Thursday is credited/debited threefold as the value date for the position opened on Wednesday is Friday. When the position is rolled over from Wednesday to Thursday the value date increases not for one day but for three days and it becomes Monday. That’s why storage from Wednesday to Thursday is debited/credited threefold.