Forex & CFD

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

Important: For ease of calculating the value of one point we recommend to use the trader’s calculator.

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 2.3533 and close the opened position at the price 2.3534 (1 point = 2.3534 - 2.3533 = 0.0001).

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 currecny is the second currency in the quotation,
for example:
EURUSD – the quote currency USD;
GBPCHF – the quote currency CHF;
EURGBP – the quote currency GBP.

Example 1. Calculating the value of one point in GBPCHF on a trading account with the deposit currency USD:

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.

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;

Example 2. 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 points = 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.