Using a profit calculator you can arrive at the same conclusions on the examples we have here for forex Australia. You still want to understand the basic principles though, which is why the formula: profit=lot size x pip change, is important. A pip is .0001 and you do use the tick size instead of the pip value to determine profit. Examine the following examples to understand what this means.
Forex Australia EUR/USD Example for 1 Pip Gain
Even though this is for an Australian audience since the EUR/USD is the example the account will be USD. The trade price for EUR/USD was 1.3337 at the time of calculations. The rate will always change thus you always need to do a calculation for the most current rate when you enter into a forex Australia trade position. The assumption for this example is that you will buy or go long on the EUR/USD. You sell USD to buy EUR in other words.
This is for a mini account which allows lot sizes of 1,000 units. If you have 1,000 units then a pip in the EUR/USD pairing is equal to $1. Pip value is different from the tick size. You want to use the tick size when you do a profit calculation. On the assumption that our first example only gains 1 pip, which is a tick size of .0001 you earn .10 cents in profit. You get this because you take 1,000 times .0001 and you get .10 cents USD profit.
A single pip movement in forex Australia is not very large. In fact if you only make 1 pip profit each time you trade you won’t double your account balance anytime soon. If you decided you would enter three contracts of 1,000 or 3,000 units you would make .30 cents. Study up on leverage since leverage can enhance your position without having a huge amount in your margin balance.
Forex Australia EUR/USD Real Example
This time the previous close for the EUR/USD was accessed from the daily chart. The close was 1.3390. The assumption here is that you sold EUR/USD in favour of the USD gain. It also means you went short for the forex Australia trade. The account is still in USD. The starting trade price was 1.3390 and you closed out at 1.3337. You still had 1,000 units on the trade. The earnings for this transaction were $5.30. It could have been a $5.30 loss if you had bought EUR instead of USD.
The pip movement was 53 pips or .0053 thus 1,000 times .0053 is $5.30 in profit. When the pips move as they do in a normal day you can make a small, but significant profit. Forex Australia profit is often better if you make multiple trades throughout the day.
For instance if you made 20 trades for the day all with 1,000 units invested and $5 profit each time you would earn $100 for the trading day. The key is to find these trades that offer profit versus loss.