Trading Examples

Forex Trading Examples

The MetaTrader 4 trading software used at ICM includes full back office functionality that makes it easier for the trader to manage the value of open positions, as well as the profit and loss of closed trades. However, it is important traders understand how a trade works and how to calculate profits and losses manually, which we explain in more detail below.

Major Currency Pairs
EUR/USD (Euro vs. US Dollar)
GBP/USD (UK Pound vs. US Dollar)
USD/JPY (US Dollar vs. Japanese Yen)
USD/CHF (US Dollar vs. Swiss Franc)
USD/CAD (US Dollar vs. Canadian Dollar)
AUD/USD (Australian Dollar vs. US Dollar)

Primary (base) vs. Secondary Currencies

The primary currency, or the base currency, is the reference that defines the contract size. The profit and loss calculation is always derived from the secondary currency. All currencies are traded in pairs, with the base currency being the first currency of the pair, and the 'quote' or 'term' currency being the second currency in the pair. Examples are as follows:

Currency Pair Contract Size Value of 1 pip Value of 1 pip in US$
EUR/USD € 100,000 US$ 10.00 US$ 10.00
GBP/USD £ 100,000 US$ 10.00 US$ 10.00
USD/JPY $ 100,000 ¥ 1,000 (Divide by current USD/JPY rate)
USD/CHF $ 100,000 CHF 10.00 (Divide by current USD/CHF rate)
USD/CAD $ 100,000 CAD 10.00 (Divide by current USD/CAD rate)
AUD/USD AUD 100,000 US$ 10.00 US$ 10.00


In order to buy or sell 1 contract (lot) of a particular currency pair, the client must have a minimum of $1,000 in the account, or an approximate 1% margin. This means a $1,000 initial margin is required for every 100,000 in currency traded, which corresponds to a leverage of 1:100. If the trader has less than $1,000, they can still trade, but this will be with less than 1 lot.

ICM has no maintenance margin, however, a 1% margin is initially required on standard accounts. In order to ensure client accounts do not extend into negative equity, the trading platform automatically closes all positions at the 5% equity/margin ratio.

Profit and Loss Calculation Examples

Buy 5 EUR/USD at 1.3450 | Sell 5 EUR/USD at 1.3490

1.3450 (open price) x 5 (lots traded) x 100,000 (contract size) = 672,500

=1.3490 (close price) x 5 (lots traded) x 100,000 (contract size) = 674,500

$ 2,000 (Profit)

Buy 5 EUR/USD at 1.3156 | Sell 5 EUR/USD at 1.3124

1.3156 (open price) x 5 (lots traded) x 100,000 (contract size) = 657,800

1.3124 (close price) x 5 (lots traded) x 100,000 (contract size) = 656,200

$ 1,600 (Loss)

Sell 3 USD/CHF at 0.8982 | Buy 3 USD/CHF at 0.8924

0.8982 (open price) x 3 (lots traded) x 100,000 (contract size) = 269,460

0.8924 (close price) x 3 (lots traded) x 100,000 (contract size) = 267,720

CHF 1,740 (Profit)

Sell 3 USD/CHF at 0.9141 | Buy 3 USD/CHF at 0.9191

0.9141 (open price) x 3 (lots traded) x 100,000 (contract size) = 274,230

0.9191 (close price) x 3 (lots traded) x 100,000 (contract size) = 275,730

CHF 1,500 (Loss)


In order to obtain USD value, the CHF Profit amount must be divided by the Closed Price CHF 1,740 ÷ 0.8924 (closed price) = $1,949.79.

    CFDs and Spot FX are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.31% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs and Spot FX work, and whether you can afford to take the high risk of losing your money. Read more
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