# Trading Example

Master trading knowledge and start an easy trading trip.

### About Trading example

Forex trading is the world's largest financial market, with an average daily trading volume of \$5.3 trillion. Forex trading buys one currency and sells another, so it always trades in pairs. Forex quotes are also constantly floating based on market demand and supply.

### First you need to know

To calculate the profit and loss of a foreign exchange order, we must first understand how to calculate the foreign exchange point value pip: all foreign currency pairs can be divided into three categories: forward quoted currency pairs (such as EUR/USD, GBP/USD, etc.), reverse quoted currency pairs (such as USD/JPY, USD/CHF, etc.) and cross-currency pairs (such as GBP/CHF, EUR/JPY, etc.)

1. Currency pair of forward quotation: [pip]= [lot size] * tick size] ""Lot size is the number of contracts per hand; tick size is the number of jumping points, such as EUR/USD, which is 0.00001. For the currency with forward quotation, the value of each point is constant, independent of the current quotation Example: For EUR / USD, lot size is 100,000 and tick size is 0.00001. Point value [pip] = 100000 * 0.00001 = \$1""

2. Currency pair of reverse quotation: [pip]= [lot size] * [tick size]/ [current quote] ""For currencies with reverse quotations, the value of each point depends on the current quotation. Example: For USD / JPY, lot size is \$100,000 and tick size is 0.001. The quotation is 109.380, [pip] = 100000 * 0.001 / 109.38 \$0.914"

3. Point values of cross-currency pairs: [pip]= [lot size] * [tick size] * [base quote]/ [current quote] ""Among them, base quote is the current quotation of the quoted currency against the US dollar. Example: For GBP/CHF, lot size is 100000, tick size is 0.00001, base quote is GBP/USD is 1.26646, current quote is 1.25731, point value is 100000 * 0.00001 * 1.26646 / 1.25731≈1\$"

Knowing the point value of the currency pair, let's now calculate the profit and loss of a foreign exchange order. Foreign Exchange Profit and Loss = Point of Profit and Loss * Point Value * Trading Volume (Positive Fluctuation with Order Direction, Final Positive Value, Otherwise Negative Value) Take USDJPY as an example. We sold 5 empty orders when USDJPY quoted 109.380 and closed the position when the price reached 108.580 (1 basis point value was US\$0.914). Profit and loss=[(109.380-108.580) that is 800 basic points] *0.914*5 = 3656 US dollars;"

### Metals

Taking XAUUSD as an example, the minimum number of jumping points is 0.01, and the point value of one base point is \$1 (under six quotations) We bought five sizes orders when XAUUSD quoted \$1220.15 per ounce and closed our position at \$1231.25 per ounce.
Open price close price points value size profit
1220.15 1231.25 1100 1USD 5 5500USD
"Profit and loss amount =[1231.25-1220.15 ( 1110 basis points)] *1 U.S. dollars (point value)*5 standard sizes = 1110 U.S. dollars"

### Commodities

"Taking WTI as an example, the minimum number of jumping points is 0.001, and the point value of one base point is \$1 (under five quotations). We bought five sizes orders when WTI quoted 52.363 and closed our position at 53.763"
Open price close price points value size profit
52.363 53.763 1400 1USD 5 7000USD
"Profit and loss amount =[53.763-52.363. ( 1400 basis points)] *1 U.S. dollars (point value)*5 standard sizes =7000 U.S. dollars"

### Indices

"Taking DJ30 as an example, the minimum number of jumping points is 0.1, and the point value of one base point is \$1 (under five quotations). We bought two sizes orders when DJ30 quoted 25032.8 and closed our position at 25432.8" Profit and loss amount =[25832.8-25032.8. (4000 basis points)] *1 \$ (point value)*2standard sizes =\$8000
Open price close price points value size profit
25032.8 525432.8 4000 1 2 8000

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