Why is my profit less than price move times position size?

Marek's first trade looked textbook-clean. He bought 0.1 lots of EUR/USD, the rate travelled a clean thirty pips in his favour, so on paper he counted thirty dollars of profit. Yet the broker credited his balance with something closer to twenty-six. Marek recalculated three times, kept coming up a few dollars short, and concluded the platform "must be counting wrong." It is not counting wrong. The formula "price move times position size" shows gross revenue, not the result on your account. Below I take apart every leak that sits between the price on the chart and what actually lands on the balance.

Why "move times lots" is only gross revenue

The number most beginners treat as profit is really the upper, theoretical limit of the result. You take the price move in pips, multiply by the pip value for your position size, and you get a gross figure. That is a correct first step, but only the first. Just as a gross salary never reaches the account in full because contributions and tax come out along the way, a price move never reaches the wallet in full because trading costs come out along the way. Your real result is gross revenue minus the sum of those costs, and they are predictable and calculable down to the cent.

The most important thing is to separate two ideas from the start: the market move, and the cost of accessing that move. The market handed Marek thirty pips, that is a fact. But to enter that move and exit it at all, Marek had to pay the broker for the service. Those charges do not depend on whether he won or lost, so they should be treated as a fixed cost of doing business rather than as bad luck. They leak in four, sometimes five places, and I will take each one separately.

The spread, the loss you see before the price moves

The first and most often overlooked leak is the spread. You open a long position at the ask, the higher of the two quotes, while the platform measures your live result against the bid, the lower one. The mechanics of execution on the bid and ask side are exactly what I cover in the article on bid and ask prices and order execution. The result is that at the instant of opening, the position shows a loss equal to the spread, even though the rate has not moved. If the EUR/USD spread is one pip, a long position starts at roughly minus one pip.

That means the real net move you earn is smaller than the move shown on the chart by the full spread. Marek saw thirty pips, but his position first had to recover the spread, so the move that reached his pocket was shorter. And there is more: you pay the spread on entry and again on exit, because closing a long position means selling on the bid side. In practice the spread cost is embedded in those two moments rather than charged as a separate line on the statement, which is exactly why it is so easy to miss.

Commission and swap, the costs that are easy to skip

The second leak appears on ECN or raw accounts. There the spread is raw and close to zero, but the broker charges a separate commission for every lot turned over, counted round turn, that is for the open and the close together. On a standard account you will not see that line, because the cost is hidden inside a wider spread. These are simply two ways of packaging the same charge, and which one comes out cheaper is what I unpack in the comparison of spread versus commission as real trading costs. For the result, one thing matters: commission, where it applies, has to be subtracted from gross revenue.

The third leak is swap, the swap points charged for holding a position overnight. If you close everything within the day, swap does not touch you. But when you hold across the rollover moment, that is across midnight in the broker server time, swap adds to or subtracts from the result, depending on the interest rate differential between the two currencies in the pair and the broker margin. Marek held his position across two nights, so he paid a negative swap twice, and that is another amount that was never in his original "thirty pips times pip value" sum.

Converting the result and the pip-value trap

The fourth leak affects anyone trading a pair that is not quoted in their account currency. If you hold an account in zloty and open a position on GBP/JPY, your result is born in yen and has to be converted first to an intermediate currency and then to zloty at the prevailing rate. At each such conversion a small difference is left behind, and some brokers add their own mark-up for the conversion on top. Individually these are pennies, but across many trades a month the sum becomes noticeable. The MetaTrader 5 documentation states plainly that a position result is converted into the deposit currency at the current rate.

The fifth issue is not really a cost but a common error in the calculation itself: a wrongly assumed pip value for the pair. That value depends on the pair, the position size and the account currency. For pairs with the dollar as the quote currency, one pip on a micro lot is worth roughly ten cents, on a mini lot one dollar, on a standard lot ten dollars. If someone plugs in the pip value for a different size or a different pair, their gross estimate is out of step with the platform from the start, and the whole feeling of "money is missing" comes from arithmetic, not from hidden charges.

Let us run the numbers (an illustrative example)

Let us go back to Marek's trade and break it down step by step. This is an illustrative example, rounded for clarity, but the figures are realistic for an ECN account and the EUR/USD pair.

The numbers line up with what Marek saw. Thirty dollars gross became about twenty-six net, because each leak took its share. Had Marek closed the position within the day, the swap would have dropped out. Had he traded a standard account, the explicit commission would have vanished, but the spread would have been wider, so the total cost would have come out much the same. The price move itself does not lie; only the assumption that it reaches the account in full does.

"Transaction costs are the silent killer of profitability in short-term trading. The more often you enter the market, the more the spread and commissions decide whether you have any edge at all." — Kathy Lien, *Day Trading and Swing Trading the Currency Market*, Wiley, 2016.

How to reconcile the move with the result, step by step

The simplest way never to be surprised by the gap again is to count in two columns. In the first you write the gross revenue, the move in pips times the pip value for your exact position size. In the second you total the costs: the spread times two, the commission if your account charges one, and the swap for each night held. The difference between the two columns is your real result, and that is the figure that should match the balance.

It is also worth checking your own account specification at the broker from time to time, where the current rates for spread, commission and swap points are listed. A broader walk-through of these costs sits in the forex basics section on forexmechanics.com. Once you reconcile a single trade from start to finish, the mechanics become a habit, and you will make the next estimates in your head to within a few per cent.

What to do tomorrow

1. Reconstruct your last trade in two columns. Write down the gross revenue as the move in pips times the pip value, and next to it list the spread counted twice, the commission, and the swap for each night separately. The difference has to match your broker balance to within a few cents, and if it does not, you almost certainly assumed the wrong pip value.
2. Check the three rates in your account specification. Open the terms of your account at the broker and note the current spread for your main pair, the round-turn commission per lot, and the swap points for both the long and the short side. Those three numbers let you compute the real cost of any trade before you even open it.
3. Work out your break-even in pips. Add the spread times two and the commission expressed in pips, and the result is the distance the price has to travel before you reach zero. For strategies with small targets that number can eat most of the move, so you will see at once whether your system makes sense on cost alone.
4. Decide consciously whether you hold overnight. If your strategy does not require holding across midnight, close positions before the rollover moment and you avoid swap entirely. If you must hold longer, check in advance whether swap works for you or against you, because across several nights it can reverse the whole point of the trade.