Calculating Gross Profit

Understanding Gross Profit Calculation 📊

Gross profit can be calculated using the following formula:

Gross Profit = (Close Price × Contract Size) – (Open Price × Contract Size)

Currency Conversion Example

For trades involving different base currencies (e.g., trading EURGBP when your account is in USD), the calculation requires an additional step:

Example:

• Contract Size: 0.19 lots (19,000 EUR).
• Open Price: 0.6983 EURGBP.
• Close Price: 0.6883 EURGBP (100 pips profit).
• GBPUSD Rate: 2.0256.

Steps:

1. Calculate GBP Profit:

Profit (GBP) = (19,000 × 0.6983) - (19,000 × 0.6883) = 13267.7 - 13077.7 = 190 GBP

2. Convert to USD:
   190 GBP × 2.0256 = 384.86 USD

The total profit in USD is $384.86.

Key Considerations

• Broker Exchange Rates:
  Brokers automatically convert profits into your account's base currency using their exchange rates at the time of the trade. These rates may not be publicly available for historical data.
• Manual Input in Trading Vault:
  Since Trading Vault cannot determine broker-specific exchange rates, manual entry of gross profit is required for accurate records.

By understanding these principles, you can ensure your trading journal reflects accurate data, especially for multi-currency trades.