Calculating Profit and Loss

The foreign exchange market is an around-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always done in currency pairs. To understand how the exchange rate can affect the value of your Forex investment, a trader should know how to read a Forex quote.
Most online forex trading platforms like automatically calculate the Profit & Loss of a traders. However, it is useful to understand how the calculation process is.

Let's illustrate how to calculate the P&L:

The current bid/ask price for EUR/USD is 1.2320/23, meaning you can buy 1 euro with 1.2323 US dollars or sell 1 euro for 1.2320 US dollars.
Suppose you decide that the Euro is undervalued against the US dollar. To execute this strategy, you would buy Euros (simultaneously selling dollars), and then wait for the exchange rate to rise.
So you make the trade: to buy 100,000 euros you pay 123,230 dollars (100,000 x 1.2323). Remember, at 1% margin, your initial margin deposit would be $1,232 for this trade.
As you expected, Euro strengthens to 1.2395/98. Now, to realize your profits, you sell 100,000 euros at the current rate of 1.2395, and receive $123,950.
You bought 100k Euros at 1.2323, paying $123,230. You sold 100k Euros at 1.2395, receiving $123,950. That's a difference of 72 pips, or in dollar terms ($123,950 - $123,230 = $720).
So the total profit is US $720
That is how the process of calculation is done. When calculating profit or loss, the trader should consider the spread as well as the interest differential.

[ForexGen Live Accounts Contest]

Trade, Compete, and Win - Begins the 1st of Every Month!
ForexGen has the pleasure to announce the launching of its first monthly Live Accounts contest,
This is NOT a demo contest

this is a live trading [competition] open for all live mini account holders. At the beginning of each month, the slate is wiped clean and traders have a new opportunity to win the monthly prizes.

What makes this contest unique?

All prizes are CASH prizes with no restrictions on withdrawing the prize money! How Do I Enter?
You don't have to pay any fee to enter this contest, all [ForexGen] mini Accounts with a balance of "$1000" and a default leverage of 1:200 are entitled to participate in this contest upon their account holder request by sending an e-mail request on live.contest@forexgen.com

For more information about our current and future promotions, kindly contact one of our customers support agents at promotions@forexgen.com