Profit & Loss (Example 2)
You bought 3 contracts of Silver at price 19.86. In few days, the market goes up in your favor and you close your order at price 20.30.
Your profits will be as follows:
Profit/Loss = (Bid Price – Ask Price) X Contract Size X Number of Lots Profit/Loss = (20.30 – 19.86) X 5,000 Oz X 3.0 Lots Your Profit = 6,600 USD
Profit & Loss Calculation for Indexes
Trading indices in futures contracts is to buy or sell an index in the futures market for delivery on a specified future date. An index is an imaginary portfolio of securities representing a particular market or a portion of it.
The most common indices that are made available for OTC trading by most brokers are the US indices: S&P 500, NASDAQ 100, and Dow Jones.
When an index price goes up or down, the difference in points will be your profits or losses. Profit/Loss is calculated for indices according to the following equation:
Profit/Loss = (Bid Price – Ask Price) X Index Point Value X Number of Contracts
S&P Point Value = $50 NASDAQ Point Value = $20 Dow Jones Point Value = $10