List units before calculating

Identify contract size, lots, quote currency and account currency. A simplified long FX result is exit price minus entry price, multiplied by base-currency quantity. Pip-value calculations also require a defined size and currency.

Separate collateral from the result

An illustrative 10,000 euros at 1.10 represents 11,000 dollars. At a hypothetical 5% margin rate, collateral is 550; a move to 1.1050 produces a gross difference of 50. The margin rate is only an example.

Apply the actual terms

Tiered requirements, financing, commissions and conversion may apply. Reconcile estimates with specifications and order previews. Available margin is not the same as a personal maximum-loss allowance.

Reconcile two independent calculations

After estimating margin, independently calculate the result of a small price move. If the two have been treated as the same quantity, check percentages, pip values and notional amounts. Separate equations make unit errors easier to find than accepting a single summary figure.

Source and reading notes

This is an independently written educational overview based on the ATFX reading linked below. Examples are illustrative, not live quotes or forecasts. It does not reproduce the original article or imply endorsement by its author.