How to calculate the financial result (Profit and Loss)
The financial result of a trade depends on whether it is a buy (long) or a sell (short) position.
For a Buy (Long) position:
PL = S * M * ( E𝑐 / E₀ – 1 ) – C
PL: Profit or loss of the trade
S: Trade amount in USD
M: Leverage multiplier
E₀: Entry price (opening quote)
E𝑐: Exit price (closing quote)
C: Commissions (e.g., opening fee + overnight rollover/swap)
For a Sell (Short) position:
PL = S * M * ( 1 - E𝑐 / E₀ ) – C
PL: Profit or loss of the trade
S: Trade amount in USD
M: Leverage multiplier
E₀: Entry price (opening quote)
E𝑐: Exit price (closing quote)
C: Commissions (e.g., opening fee + overnight rollover/swap)
Example 1
Trade size: $1,000
Multiplier: x10
Entry price: 15,345 (Dow Jones)
Exit price: 15,515
Commissions: $1.7 (opening) + $3.8 (swap) = $5.5
PL = 1000 * 10 * (15515/15345 - 1) - 5.5 = $105.29
Profit: $105.29
Example 2
Same parameters, but you open a short position instead:
PL = 1000 * 10 * (1 - 15515/15345) - 5.5 = -$116.29
Loss: $116.29
How to calculate the pip value
You can use the P&L formula to estimate the pip (point) value (the amount your P&L changes when the price moves by 1 pip). Based on the calculation formula, a number of parameters are taken into account to obtain the result of the trade, including the commissions charged.
Example
Trade size: $1,000
Multiplier: x10
Instrument: EUR/USD
Entry price: 1.22300
Exit price: 1.22310 (1 pip higher)
No commissions (for simplicity)
PL = 1000 * 10 * (1.22310/1.22300 - 1) - 0 = $0.82
So, the pip value = $0.82 for this specific trade.
You can find the full trading operations regulations here.