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How to Calculate Forex Profit: Formula & Examples
Profit in foreign exchange is the difference between your open (entry) and close (exit) price, per Myfxbook, a trading analytics site (Profit Calculator | Myfxbook, retrieved 2026-10-13). Example: 20 pips (1 pip = .0001) on one standard lot (100,000 units) of USD/CHF, the US dollar against the Swiss franc, equal $137.40 at $6.87 per pip.
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What Is Profit in Forex? The Definition and the Formula
Here is the answer up front, using the published example: buy 1 standard lot of USD/CHF at 1.4530, close at 1.4550, a 20-pip move. Pip value is (.0001 / 1.4550) x 100,000 = $6.87 per pip. Twenty pips x $6.87 = $137.40 profit. The BabyPips figures (BabyPips, retrieved 2026-10-13) are unpacked below.
The definition converts into money through two components:
- The pip distance: how far price traveled between entry and exit.
- The position's pip value: what one pip is worth for your whole position, derived in the published example as (.0001 / exchange rate) x units.
Multiply them together and you have gross profit:
Profit on a long = (exit price − entry price) x position size; a short reverses the subtraction (entry minus exit). Expressed through pips: pip count x pip value, converted into your account currency where the quote currency differs from it.
Two published worked examples compared (figures from BabyPips and Investopedia, retrieved 2026-10-13):
| Source | Trade | Pip count | Pip value | Result |
|---|---|---|---|---|
| BabyPips (forex education site) | 1 standard lot USD/CHF, 1.4530 to 1.4550 | 20 | $6.87 | $137.40 |
| Investopedia (financial education site) | 10,000 EUR vs USD, 1.0801 to 1.0811 | 10 | $1.00 | $10 |
The methods agree: count pips, price the pip, multiply. The dollar gap comes from pip count, per-pip value and position size, not from any disagreement about the math.
House calculation, same 20 pips on equal size: the two worked results use different position sizes, so we scaled both to 10,000 units. The BabyPips result is $137.40 on 100,000 units, or $13.74 on 10,000 units (137.40 ÷ 10). The Investopedia pip value is $1 on 10,000 units, so 20 pips would make $20 (1 × 20). Result: 20 pips earn $20.00 on EUR/USD versus $13.74 on USD/CHF at a 1.4550 close, about 1.46 times as much. Method: 2 published examples, 20 pips each, normalized to 10,000 units by simple division and multiplication of the published figures; no other data used.
Which Prices Do You Read When You Calculate Profit?
Every currency pair quotes two prices at once: the BID (what the market pays you when you sell) and the ASK (what the market charges you when you buy). There is a fixed rule for which one applies to your trade: when you buy a currency, you will use the offer or ASK price; when you sell, you will use the BID price (What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13).
Step-by-step: counting pips from entry to exit
- Identify your direction. A buy (long) profits when price rises; a sell (short) profits when price falls.
- Pick the correct side for each fill. A long opens at the ASK and closes at the BID. A short opens at the BID and closes at the ASK.
- Subtract and scale. For a long: exit minus entry. For a short: entry minus exit. For pairs quoted to four decimals, one pip is .0001, so a difference of .0020 is 20 pips.
In the BabyPips example, the difference between 1.4530 and 1.4550 is .0020, or 20 pips (BabyPips, retrieved 2026-10-13).
Why the same 20 pips can be worth different dollar amounts
Pips measure distance, not money. The conversion to dollars runs through the formula (.0001 / exchange rate) x units, and both variables move the result:
- Exchange rate: the pip value of a quoted currency depends on the rate at the close. The same USD/CHF trade closed at a different rate produces a different per-pip dollar value. The $6.87 figure is tied specifically to the 1.4550 close.
- Units: position size scales everything linearly. For the EUR/USD pair, multiplying a trade value of 10,000 euros by .0001 gives a pip value of $1 (What Are Pips in Forex Trading, and What Is Their Value? - Investopedia, retrieved 2026-10-13).
Does the Formula Hold Up in Practice? Two Verified Examples
Example 1: BabyPips, USD/CHF, one standard lot. The published example opens by buying 1 standard lot (100,000 units) at 1.4530 (What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13). The trade closes at 1.4550. Step one, pip count: 1.4550 − 1.4530 = .0020 = 20 pips. Step two, pip value: (.0001 / 1.4550) x 100,000 = $6.87 per pip. Step three, profit: $6.87 x 20 pips = $137.40.
Example 2: Investopedia, EUR/USD, small position. If you bought 10,000 euros against the dollar at 1.0801 and sold at 1.0811, you would make a profit of 10 pips or $10 (What Are Pips in Forex Trading, and What Is Their Value? - Investopedia, retrieved 2026-10-13). The check: 1.0811 − 1.0801 = .0010 = 10 pips, and at $1 per pip on that position the trade lands at $10.
Example 3: Investopedia, pip counting only. If the trader bought the euro for 1.1835 and exited the trade at 1.1901, they would make 66 pips on the trade (1.1901 - 1.1835) (What Are Pips in Forex Trading, and What Is Their Value? - Investopedia, retrieved 2026-10-13). Example 3 isolates step one of the method: pure distance counting, before any dollar conversion.
Which Hidden Price Rule Changes Your Profit Before You Even Close?
The bid-ask spread, the gap between the two quotes: you buy at the higher ASK and sell at the lower BID, so the cost is priced in from the first second, before spreads itemized as fees, commissions or any other cost. The 20 pips in the BabyPips example (BabyPips, retrieved 2026-10-13) are counted between two specific fills, never between two mid-quotes off the chart.
What Does This Calculation Mean for Your Money and Costs?
Everything above produces gross profit: $137.40 in the BabyPips example (BabyPips, retrieved 2026-10-13). It is the honest output of the formula, but it is not necessarily the number that reaches your bank account, and knowing the difference is where independent cost accounting pays off. If you trade on a prop firm account, your payout is derived from gross trading profit but reduced by the profit split structure, and what a payout does to your drawdown matters because removing calculated profit shrinks the buffer that protects you from breaching limits. In evaluations, per-trade profit accumulates toward a profit target: it lets you verify progress independently of any dashboard.
| Cost or conversion factor | Effect on your profit |
|---|---|
| Lot size (units) | Profit scales linearly: the published $137.40 on 100,000 units scales down with the unit count |
| Exchange rate in pip value | The $6.87 per pip figure is tied specifically to the 1.4550 close; a different rate changes it |
| Bid/ask spread | Longs enter at ASK and exit at BID: the spread is priced in from the first second |
| Withdrawals | A withdrawal reduces the drawdown cushion protecting your account |
Verified facts at a glance
| Fact from the research ledger | Source |
|---|---|
| Profit in foreign exchange is the difference between your open (entry) and close (exit) price. | Profit Calculator - Myfxbook, retrieved 2026-10-13 |
| Rule for reading prices when calculating profit and loss (P/L): when you buy a currency you use the offer or ASK price; when you sell, you use the BID price. | What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13 |
| BabyPips' published example opens with 1 standard lot (100,000 units) of USD/CHF bought at the ASK price of 1.4530. | What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13 |
| In the same example, closing at 1.4550, the difference between 1.4530 and 1.4550 is .0020, or 20 pips. | What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13 |
| The complete profit formula in BabyPips' worked example: (.0001/1.4550) x 100,000 = $6.87 per pip, multiplied by 20 pips = $137.40 profit on one standard lot. | What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13 |
| For the EUR/USD pair, a trade value of 10,000 euros by .0001 gives a pip value of $1; buying at 1.0801 and selling at 1.0811 makes 10 pips or $10. | What Are Pips in Forex Trading, and What Is Their Value? - Investopedia, retrieved 2026-10-13 |
| A trader who bought the euro for 1.1835 and exited at 1.1901 made 66 pips (1.1901 - 1.1835). | What Are Pips in Forex Trading, and What Is Their Value? - Investopedia, retrieved 2026-10-13 |
Frequently Asked Questions
Direct answers about forex profit calculation.
What is profit in forex?
Profit in foreign exchange is the difference between your open and close price, converted into currency by your position's pip value and lot size. Source: Profit Calculator | Myfxbook, retrieved 2026-10-13.
How do you calculate profit in forex?
Count the pips between entry and exit, compute pip value as (.0001 / exchange rate) x units in the published example, and multiply: pips x pip value. In the verified example, (.0001 / 1.4550) x 100,000 = $6.87 per pip, and x 20 pips = $137.40. Source: What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13.
How do you count pips when you calculate forex profit?
To count pips when you calculate forex profit, subtract the entry from the exit for longs (exit minus entry) and reverse for shorts. One pip is .0001 on four-decimal pairs. Example: buying the euro at 1.1835 and exiting at 1.1901 makes 66 pips (1.1901 - 1.1835). Source: What Are Pips in Forex Trading, and What Is Their Value? - Investopedia, retrieved 2026-10-13.
When you calculate forex profit, do you buy at the bid or the ask?
You buy at the ASK and sell at the BID: when you buy a currency, you use the offer or ASK price; when you sell, you use the BID price. Using the wrong side inflates your pip count before fees. Source: What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13.
How much is 20 pips worth in forex profit?
It depends on the pair, the exchange rate at the close and the units traded, with the result converted into your account currency. In the BabyPips example, 20 pips on 1 standard lot (100,000 units) of USD/CHF closed at 1.4550 equal $137.40, or $6.87 per pip. In the Investopedia example, 10,000 euros of EUR/USD at $1 per pip would make $20 over 20 pips. Sources: What is a Lot in Forex? - Babypips.com, retrieved 2026-10-13, and What Are Pips in Forex Trading, and What Is Their Value? - Investopedia, retrieved 2026-10-13.
Sources
- Profit Calculator | Calculate your profit with the Profit Calculator - Myfxbook myfxbook.com Retrieved 2026-10-13.
- What is a Lot in Forex? - Babypips.com babypips.com Retrieved 2026-10-13.
- What Are Pips in Forex Trading, and What Is Their Value? - Investopedia investopedia.com Retrieved 2026-10-13.