How is the profit on financial markets calculated?

When trading on the financial market, you sell or buy financial instruments expecting their prices to fall or rise in the future.

If, according to calculations, the price is going to rise, a trader opens a buy order. Otherwise, they open a sell order.

The profit is the difference between the price, at which a trader buys or sells the chosen asset, and the price, at which the order is closed (minus spread and (or) the broker’s commission).

Let’s consider a simple example:

You purchased 1 lot EURUSD at 1.2291, which means that you bought 100,000 EUR (1 lot is 100,000 units of the base currency, which is the first symbol in the instrument ticker) for 122,910 (1.2291 * 100,000).

After a while, the price went up to 1.2391 and you closed the position. At that moment, the amount you bought remained the same (100,000 EUR), but due to the price change, it cost 123,910 USD (1.2391 * 100,000).

Your profit will be 123,910-122,910 = 1,000 USD.