**Get your calculators ready!**

There are 3 main groups (or types) of Currency Pairs:

**• Direct Rates :** These are Currency Pairs where the USD (US Dollar) is the counter/quote currency (USD is the second quoted pair i.e. on the right hand side of the pair). For example: GBP/USD, EUR/USD, AUD/USD, NZD/USD

**• Indirect Rates:** These are Currency Pairs where the USD (US Dollar) is the base currency (USD is the first quoted pair i.e. on the left hand side of the pair). For example: USD/JPY, USD/CHF, USD/CAD

**• Cross Rates:** These are Currency Pairs where the USD (US Dollar) is not quoted. For example: EUR/GBP, EUR/JPY, GBP/JPY, AUD/NZD

**Calculating the Profit & Loss of Direct Rates:**

0.0001 x contract size x lot = Pip Value

So

0.0001 x 100,000 x 1 = USD 10 a pip

(OpenPrice minus ClosePrice) x contract size x lot = Profit or Loss

For Example:

Buy 5 lots of GBP/USD at 1.5645 and Sell (close) the position at 1.5655

(1.5655 Minus 1.5645) x 100,000 x 5 = USD 500 Profit

**Calculating the Profit & Loss of Indirect Rates:**

We use the same calculation as above but: the pip value will be in counter currency terms so we would need to divide that by the current rate to convert the pip value into USD

For Example:

Buy 5 lots of USD/CAD at 1.3150 and Sell (close) the position at 1.3160

(1.3160 Minus 1.3150) x 100,000 x 5 = CAD 500

CAD 500 divided by 1.3160 (closing rate in this example) = USD 379.93 Profit

**Calculating the Profit & Loss of Cross Rates:**

We use the same calculation as above but: the pip value will be in counter currency terms so we would need to multiply that by the current rate of the cross rate base currency rate against USD to convert the pip value into USD

For Example:

Buy 5 lots of EUR/GBP at 0.7140 and Sell (close) the position at 0.7150.

(0.7150 Minus 0.7140) x 100,000 x 5 = GBP 500

GBP 500 x 1.5650 (current GBP/USD rate) = USD 782.50 Profit

#tradesafely #doublehit