Forex trading is lucrative as well as risky at the same time, and in order to mitigate the risk, traders use all sorts of methods. The key to effective risk management depends upon the accurate positioning of trades. Doing this will avoid the possibility of heavy losses in case you make a significant mistake during a trading cycle. Forex trading calculators have seen a major transformation over the years, which has allowed them to return with more accurate calculations based on the inputs given by the traders.
Today, traders can get access to different types of trading calculators to calculate different aspects of the trade, from position size to pips and margin to profits, etc. The presence of a trading calculator in the whole equation has made trading a lot more straightforward. Let’s assume, you want to calculate the potential profit in a certain trade, so you can simply add the values in the forex profit calculator and find it out. A good thing about all forex trading calculators is that they are very convenient to use, as you don’t have to download any app to use them.
Why Use a Forex Profit Calculator?
There is a rising demand for a forex profit calculator in the trading community. It is one of the easiest tools to access and even beginners can use a profit calculator without any problems. However, experts suggest traders use such tools only on trustworthy websites. Failing that, traders may get incorrect values, which could lead to unnecessary losses.
Key Features of Forex Profit Calculators
Using this calculator will assist novice traders in predicting potential income or loss. Newbies usually have no idea how to determine basic trading indexes, so they won’t be able to fulfill any analysis unless they use specific applications like the forex profit calculator.
To calculate profit or loss, traders will have to enter the following data in the appropriate fields of the calculator:
- Currency Pair – Enter the currency pair you are looking to trade, for example, EUR/USD, USD/JPY, AUD/CAD, AUD/JPY, or any other.
- Opening Price – The cost at which you’ll buy the pair is called the opening price, and it is different from the previous day’s closing price.
- Trade Volume – This is calculated in lots, so the number of lots you select defines your trading volume.
- Closing Price – The cost at which you’ll sell the currency pair at the end of the trading day would refer to as the closing price. It is also known as the ‘benchmark price’ by traders.
- Operation Type (buy or sell) – You need to choose whether you are buying or selling an asset. In trading terms, these are called ‘going long’ and ‘going short’ respectively. Going long means you are bullish on a pair and will buy it to make profits, and going short means you are bearish on a pair and will sell it to make profits.
- Deposit Currency – Enter the currency with which you wish to deposit the funds into your trading account. Mostly, traders add USD, but there are other options as well like EUR, GBP, and more.
Calculating Profit & Loss With Example
It is very easy to calculate profit and loss in a profit calculator. Let’s assume that you are trading EUR/JPY, which has an exchange rate of 96.350/96.370, and you wish to buy 100,000 EUR. In this case, you have spent 100,000 x 96.370 = 9,637,000 JPY.
Next, let’s assume that the rate of EUR/JPY becomes 97.610/97.580 in a month, and you want to reverse the transaction, then you will get 100,000 x 97.610 = 9,761,000 JPY.
The total profit you are going to make would be 9,761,000 – 9,637,000 = 124,000 JPY. Doing this calculation manually would take a lot of time, but with the help of a profit calculator, you can calculate the profit in seconds with an error probability of almost zero.
Pros of Using Online Profit Calculators
Traders can use an online profit calculator to trade from anywhere in the world and calculate the profit and loss. Here are some of the notable advantages of using an online profit calculator:
- Traders can use it on-the-go, as it is a quick and reliable method of ascertaining potential profit or loss.
- Using this calculator, traders can easily assess a position, whether they should go long or short.
- Traders can predict the result of a certain position in the near future and can create a strategy accordingly.
- Since all the calculations are done using software, the chances of human error are almost nil.
- Traders can access them on their laptops, desktops, tablets, smartphones, etc.
However, traders should keep in mind to use this or any other forex trading calculator from a reputable broker, which is backed by forex regulatories, to ensure fairness and accuracy. Moreover, a forex trading calculator from a trusted broker will work on different platforms without any issues.
Usually, online profit calculators don’t demand huge system requirements. So, traders can easily access them on their old devices. Such a feature is useful for novice traders especially those who don’t have powerful devices. Even experienced traders can use this calculator to quickly determine the profit and devise trading strategies accordingly. The only thing to keep in mind is that traders should only choose a trusted website for using a forex profit calculator for higher accuracy. There are only benefits of using forex trading calculators, plus it does not make sense to use conventional methods when such highly sophisticated technology is available on the market.