One of the more simpler tools used by many Forex traders, is the profit calculator. These types of calculators allow you to calculate the amount of profit you will make with a specified trade. Of course these tools also calculate potential losses for you too, but Forex traders generally use these calculators to predict how much profit they will potentially make by placing a certain order.
These kinds of calculators are very easy to use and are not complex at all. In order to use one of these sorts of calculators, all you are required to do is:
1. Select the currency that your account works in.
2. Select the currency pair that you wish to trade.
3. Enter the price at which you would enter the trade.
4. Select the action you would like to take (whether it be to buy or sell).
5. Enter the numbers of units (the size of the trade).
6. Enter the price at which you would exit the trade.
After following the above steps, all you would need to do is submit the information. The calculator would then calculate the amount that you would earn through placing the order that you specified, expressed conveniently in terms of the currency that your account works in.
For example, your account might work in USD. You might then want to sell EUR/USD once it reaches a value of 1.3, placing an order worth 100 units and closing your order once it reaches a value of 1. You would input all of this data into a Forex trading profit calculator and after submitting the data, the calculator would return ’30 USD’ immediately after (as 30 USD would be the amount earned by placing the order specified in this example).
When using a profit calculator, you should be aware of your broker’s spreads, as the price feed provided to you by your broker will differ from the actual interbank market’s price feed (the true Forex market prices). Some Forex brokers will even have floating spreads which change, making it almost impossible to predict profits. If you broker does have floating spreads, which are spreads that are subject to change at any time, you should certainly consider opening an account with a broker that can offer fixed spreads. With fixed spreads, not only will you be able to use a profit calculator more effectively, but you will also be able to plan ahead much more effectively and your Forex trading plan will be far easier to develop, as you won’t have to take into account ever-changing spreads.
In conclusion, Forex trading profit calculators are very simple and easy to use. There are also many available on the internet for free and they can be useful, allowing currency traders to predict the outcomes of different trades efficiently with no hassle. These types of tools aren’t always necessary, but if you are looking to calculate the amount of profit that you could potentially make by placing a certain order, you should definitely consider using a profit calculator as these kinds of calculators are fast, free and 100% accurate.