Profit and loss calculations for spot gold and silver are fairly simple. The smallest increment of a spot gold price is 0.01. For spot silver, it is .001. The smallest trade you can place in spot gold or silver is a single lot. For gold that is 10 troy ounces, and for silver it is 500 troy ounces. At this level, each pip is worth $0.10 for gold and $5 for silver. For example, a change in price from 920.55 to 920.85 in gold means a difference of 0.30, or 30 pips. If you are trading 1 lot, and each pip is worth 10 cents, then the profit or loss from this trade would be $3.00.
If you decide to trade more than one lot, the value of each pip is simply multiplied by the number of lots you are trading.
Tuesday, December 1, 2009
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