Calculation of profits from Forex trading
Many novice traders are interested in the question “How to correctly calculate the profit received,” because money, as we know, loves an account.
The obtained data can be used to analyze trading performance statistics.
When making calculations, you should take into account many different nuances that play an important role, and to get a clean result from the amount received, it is advisable to subtract all the overhead costs that are present in your work.
To carry out calculations, you should use data such as the total amount of deposited funds, profit on successful transactions and losses received from trading, as well as interest accrued on free funds in the trader’s account.
For greater objectivity, you should also not forget about additional expenses that will be mandatory - payment for the Internet, virtual server, purchase of advisors or auxiliary scripts.
1. First of all, we consider our financial result for the operations performed.
Pr – Ub = Fr where Pr – profit, Ub – losses.
For example, within one month, 2750 profits were received from successful transactions and 1330 losses from losing transactions, which means that the result is 2750 – 1330 = 1420 US dollars.
In some platforms, it is possible to obtain ready-made data on the financial result, that is, the amount of profit taking into account losses for a specified period.
Then we subtract, so to speak, operating expenses - 1420-10 (Internet) -10 (virtual server) = $1400
2. To the amount received we will add the Forex interest that our broker accrued to us, for example, 30 US dollars. The result is 1400 + 30 = $1430.
The next step is to compare how profitable our work turned out to be, taking into account alternative investment options. After all, the money could have been invested elsewhere and also brought a stable income, so our calculation of profit will not be complete without taking this fact into account. Conventionally, we assume that our capital is 10,000 US dollars.
Profit from alternative investments
1. Regular bank deposit - on average, the rate on dollar deposits does not exceed 9% per annum or 0.75% per month. We multiply the amount of our investment, which is $10,000, by 0.75% and we get only $75 per month. Which is significantly less than independent trading on the currency exchange.
2. Investment fund - in this case, the profitability of investments reaches up to 45% per annum or 3.75% per month, with our capital this is about $375 monthly. Already better, but still less than we earned on our own.
3. PAMM accounts are another source of passive income, the rates here are much higher than with the two previous options and range from 10 to 50 percent monthly.
If you take a PAMM account with an average return of 25%, which means low risk, you can expect a profit of $2,500. Which is already significantly higher than our independent trading, in our case.
At the same time, we should not forget that the risks when investing in PAMMs are simply enormous and you may not only not earn money, but also completely lose your deposit.
4. Alternative strategies - if you use, so to speak, win-win strategies - http://time-forex.com/strategy/bezproiryshnye-strategii you will also be able to earn a stable profit of about 10% per month. At the same time, the risk is much lower than when investing in PAMM accounts.
All comparisons are quite relative, since in the initial stages of exchange trading it is quite difficult to make any profit, and you should not count on even 5% per month.