# Profit calculation and Lot

I still don’t understand why giving a fixed profit/loss value to a pip. Why not using same method as in stocks in which position is multiplied by number of shares?

Let’s say I open a position with 1000USD in the market, leveraged at a ratio of 50:1. Going Long (buying low for selling high), from my point of view the profit will calculated by:

Example:
EURUSD

100 USD x 50 = 50000 USD

(One line calculation) : (1.3154 - 1.3149) x 50000 = 25 USD

Equity
1025 USD

With a 1:100 leverage this would be 50 USD of gain OR 10 USD per pip. Is that why a fixed price of 10 pips is assigned to a 1000 USD lot with a 1:100 leverage?

If the leverage or capital change, this value should be multiply by (Margin * Leverage)?

Speaking of “I don’t know whys”, I don’t know why you would make this more complicated.

You open a position with \$1,000, that’s that. There’s no need to over analyze.

Compared to equities, the leverage and liquidity are much higher in Forex. The pip value is calculated from the leverage size. If you had used 1:100 leverage on your trade, then you could have yielded \$ 50.
Grix

I understand that obvious statement. Which I don’t understand is how to value a pip movement and that’s why I’m posting.

(1.3154 - 1.3149) = 5pips
100 USD x 50 = 50000 USD = 0.38 lots (50000\$ /1.3EUR/\$ /100000EUR)
Value per pip = 10 USD
Without giving much thought I believe profit should be:
Profit = 10USD5Pips0.38lots=19Euro=25\$