Look at this trade:

Sequence Side Quantity   @ Price
1.       Buy    10       @ 1,0  (with leverage of 50)
2.       Sell   10       @ 1,2  (inherits the leverage of 50?)

Imagine that this trade is a CFD or a forex with USDEUR. I use a leverage of 50 for buy. How should I include this leverage within my PnL calculations?

Is this the right formula:

PnL  = quantity * (ExitPrice * exitLeverage - EntryPrice * entryLeverage)


Do I need to multiply the entry or exit prices by the leverage at all, or does the broker already returns the trades with the "leveraged prices"?


Yes, that is right.

You could also do: Pnl = (Exit - Entry) * Leverage To save yourself multiplying by leverage twice.

There are also costs associated with putting trades on/off so these should be taken into consideration.

| improve this answer | |
  • $\begingroup$ The formula seems wrong. The leverage of exit and entry can be different, because when using (for example, FIFO), then I must sum up all trades from the entry side which can have different leverages and the trades from the exit side (which also can have different leverages). $\endgroup$ – nimo23 Apr 22 at 19:47

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.