How Profit and Loss Is Calculated
At its simplest, trading profit and loss comes from price difference.
The basic idea
- You buy at one price
- You sell at another price
If the exit price is better than the entry price → profit
If it’s worse → loss
That’s it. No magic.
Buy example
You buy EUR/USD at 1.1000
You sell at 1.1050
The difference (+0.0050) is your gain
That gain is multiplied by your trade size
Sell example
You sell EUR/USD at 1.1050
You buy back at 1.1000
The difference (−0.0050) becomes your profit
Selling first simply means you benefit when price falls
What affects the size of profit or loss
Profit and loss depend on:
- price movement
- position size (lot or volume)
Not on how confident you feel.
For exercise let's try using Tradingview
Chapters
- How Business and Markets Work Seeker
- What Can Be Traded Seeker
- What is a broker’s role? Seeker
- CFDs vs Real Ownership Seeker
- How Profit and Loss Is Calculated Seeker
- Understanding Leverage (After CFDs) Seeker
- Trading Hours & Market Sessions Seeker
- Regulation & Licenses Seeker
- Account Types, Spread, Swap, and Commission Seeker
- Real Account vs Demo Account Seeker