How to Calculate Foreign Exchange Loss

How to Calculate Foreign Exchange Loss thumbnail
Currencies trade around the clock.

Foreign exchange (or FX) currencies are among the most widely traded commodities in the world. Any nation that issues currency can trade in the foreign exchange market. Unlike some other markets, and due to the size of the market, currencies trade 24 hours a day, seven days a week. While FX trading can be fun, it is also risky. If you plan on trading, you need to understand how to calculate losses as well as profits.

Instructions

    • 1

      Determine the total price of the currency when you executed the trade. Let's say you sell 100,000 euro at EUR/US .9517. The calculation is: 100,000 EUR * 0.9517= 95,170.00 USD.

    • 2

      Determine the price decrease. Let's say that after you trade, the price of euro drops, and you sell at EUR/USD=0.9500. The transaction is: 100,000 EUR *0.9505= 95,050.00 USD.

    • 3

      Calculate the loss. The loss is the difference between the purchase and selling price. The calculation is: 95,170.00-95,050.00=120.00 USD.

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References

  • Photo Credit stock exchange and bank notes image by Warren Millar from Fotolia.com

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