What is Floating Profit/Loss?
Floating Profit/Loss refers to the unrealized gains or losses generated by an investor holding an open position, based on the difference between the current market price and the opening price.
How to Calculate Floating Profit/Loss:
The method of calculating floating profit/loss depends on your trading product and style. Here is a general method using forex trading as an example:
- Floating Profit/Loss = (Current Market Rate - Position Cost) × Volume of Transaction
Here, the current market rate refers to the latest bid or ask price, the position cost is the average cost price at which you entered the position, and the volume of transaction refers to the size of your position.
Suppose you bought a position of 10,000 euros/dollars at 1.2000, and the current market rate is 1.2100, then your floating profit/loss would be calculated as follows:
Following the above calculation method, assuming your position cost was 1.2000, the current market rate is 1.2100, and the position size is 10,000 euros/dollars, your floating profit/loss would be:
- (1.2100 - 1.2000) × 10000 = 100 dollars
It is important to note that floating profit/loss varies with market price fluctuations. When market prices change, floating profit/loss will also adjust accordingly. At the same time, floating profit/loss is only an estimate; it does not affect the available balance in the account, and only becomes a realized profit/loss when the position is closed.
