Free Forex MQL Training

Example 3: Going Long on GBP/CHF

You may have noticed from the previous two examples that the calculations of profit/loss depends on the quote currency rather than the base currency. The same concept applies for cross currencies. For example when you trade GBP/CHF the profit/loss is caclculated based on the movements on CHF (Swiss Franc). Since the account currency of denomination is USD you need to consider the price movements of USD/CHF at the time of entry and exit in order to be able to make the calculations. In other words the formula for the cross currencies would be as follows.

P/L in USD=Number of Lots x Lot Units x (Price Difference of quote currency vs. USD/Price of quote currency vs. USD at the time of the close) x Pips gained or lost

This make things a lot more complex as you need to know the exact price of USD/CHF when you enter and exit your GBP/CHF trades.

You may then ask yourself what is the point to trade cross currencies. There could be different reasons to do that. For example your strategy may fit a cross currency much better comparing to a USD paired currency. You also need to know that margin calculations are based on the base currency of a cross currency. For example when you trade GBP/CHF the amount of margin that you consume is equivalent of trading GBP/USD. So as you can see both pairs affect your account. The base affects your margin consumption and the quote affects your Profit/Loss.