Profit and loss (P/L) is the measure of how much you have gained or lost from a trade. Understanding how it is calculated helps you manage risk and evaluate strategies.

The basic formula is:

(Closing Price – Opening Price) × Contract Size × Number of Lots

• Opening Price: The rate at which you entered the trade.

• Closing Price: The rate at which you exited the trade.

• Contract Size: The standard lot size for the instrument (e.g., 100,000 units for Forex, 100 ounces for Gold).

• Number of Lots: The trade volume you selected.

For sell trades, the calculation is reversed: (Opening Price – Closing Price) × Contract Size × Lots.

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