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Profit Calc. with 3 targets

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    Profit Calc. with 3 targets

    Hello, I'm new to FX trading.

    I was wondering about profit calculation when we are scaling out

    Ex
    EUR/USD we buy 30.000 contracts @ 1.2000
    Target 1: 1.2020->T1 is reached and we scale out 10.000 contracts
    Target 2: 1.2040->T2 is reached and we scale out 10.000 contracts
    Target 3: 1.2060->T3 is reached and we scale out 10.000 contracts

    Question 1. So we made 20+40+60 = 120 pips in total for all 3 contracts (correct?)
    Question 2. What is the equation for converting the pips into dollars, when we use this sort of scaling out?

    #2
    Kronofogdn,

    When you are trading forex, you are trading units of currency essentially. 1 lot is considered 100k units. 1 mini-lot is 10k units, and 1 micro-lot is 1k units. Pips are essentially ticks, usually 0.0001 change in price except for certain pairs like the USDJPY which is 0.01 change in price. Some brokers will quote you out to half or tenth-pip as well.

    EURUSD pip = 0.0001 X 100,000 = $10.00

    USDCHF pip = 0.0001 X 100,000 = SFr 10.00

    So 120 pips gained on the EURUSD is 1200$ profit.

    Notice that your profit / pip result is quoted in second currency in the pair.

    Please let me know if I may assist further.
    Last edited by NinjaTrader_AdamP; 01-07-2012, 12:08 PM.
    Adam P.NinjaTrader Customer Service

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      #3
      Hello,

      I'm aware that a 1 pip=10$ if u trade 100.000 units of EUR/USD. But I was asking about when I trade 30.000 units and scale out.

      If you could I would very much appriciate if you could answer my 2 questions a little more rigorously.
      Because I didnt quite get the answer I was looking for. If you can answer more with equations, I would greatful, I'm quite bad at math.

      Example....
      Question 1
      Kronofogdn you are correct in that you have attained 120pips because...30.000(0.0020)+20.000(0.0020)+10.000(20) =120 pips
      Question 2
      Kronofogdn the equation for converting your attained pips to dollars when trading 30.000 units and scaling out 1/3 at each target is the one below since at T1 u have 30.000 units (3$/pip) at T2 u have 20.000 units (2$/pip) and at T3 u have 10.000 units (1$/pip)....so...
      3(20)+2(20)+1(20)

      Comment


        #4
        krono,

        I am happy to assist you.

        The formula is : PipSize * Number of units currency = Price / Pip

        This is quoted in the second currency listed in the pair, so for EURUSD, its quoted in US dollars, if it was AUSJPY it would be quoted in Japanese yen, if it was USDCHF, it would be quoted in Swiss francs.

        So in your case : 0.0001 Pips * 30,000 units = 3$ / pip

        If you gain 120 pips total, you multiply 120 pips * 3 $ / pip = 360$

        We do have some educational partners that would be happy to teach you all about it. Its a little different for example if you short a currency pair.

        Here is a link : http://www.ninjatrader.com/partners#Education

        Please let me know if I may assist further.
        Last edited by NinjaTrader_AdamP; 01-07-2012, 01:49 PM.
        Adam P.NinjaTrader Customer Service

        Comment

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