While there are various online calculators which can help you calculate Profit, Loss and Pip Value, we feel it is useful and important to understand how that actually work.

Let’s take the following trade as an example:

You think that the euro will raise in value against the US dollar and decide to buy 100,000 euros (or in other words, 1 standard lot EUR/USD) at 1.35670. This will cost you 100,000 * 1.35670 = USD 135,670.00.

Let’s assume that you were right and the price of the euro against the US dollar increased to 1.35785, which gives you a profit of 115 points or 11.5 pips (1.35785 – 1.35670 = 115).

If you decide to close your position at this point, what you are actually doing is selling your 100,000 euros at the current price of 1.35785, which means that you’d now have USD135,785.00.

Your total profit from this trade will be $135,785.00 – $135,670.00 = $115.00

This amount will be automatically converted into your trading account’s currency, in the event that it is held in a currency different than USD.