A point is not an amount of money
Interpreting a price change requires position size and the value of each price unit. For a simple linear contract, movement in points × value per point × contracts gives the position’s gross result. The sign depends on direction and the entry and exit prices.
When working in ticks, first convert the move using the instrument’s minimum price increment. Keep units on every line of your calculation; this helps reveal a point mistaken for a tick or a contract confused with several units.
A worked example
Synthetic example: a fictional contract is worth 2 currency units per point. You buy one at 100 and close at 104: four points × 2 × 1 = 8 gross units. With total modelled costs of 3, the net result is 5. Two contracts would produce 16 gross units, but their costs would also need checking.
Separate explicit fees, spread and slippage according to the model being used. If execution prices already incorporate spread or slippage, do not subtract them again as independent charges. State what the simulation includes and what it leaves out.
Check the calculation
Repeat the example with an exit at 96 and explain the loss without changing units. Then use a different quantity and compare the magnitudes. A correct practice calculation does not predict a strategy’s profitability.
- Label price, movement, point value, quantity and costs.
- Check both a positive case and a negative case.
- Move on when you can justify gross and net results and identify omitted assumptions.
Check your understanding
ACTIVITY · AT YOUR OWN PACE
Apply the idea before continuing
Write your answer before opening the reasoning. All prices, quantities and outcomes in this activity are hypothetical. Keep your explanation in your own notebook; it is not sent to the server.
The case
Hypothetical long: entry 100, exit 103, quantity 2, value 2 units per point, commission 0.50 per side per contract and adverse slippage 0.25 points per side. Prices are references before slippage.
Your task
Calculate gross outcome, total commission, monetary slippage and net separately. Do not add points to currency.
Compare my answer with the reasoning
Gross: 3 × 2 × 2 = 12. Commission: 2 sides × 0.50 × 2 = 2. Slippage: 2 sides × 0.25 × 2 × 2 = 2. Net: 12 − 2 − 2 = 8 units. If entry and exit were already fills including slippage, subtracting it again would double-count that cost.
Evidence you should be able to explain
A reproducible calculation with four amounts and the reference-price assumption.
If you cannot justify it, revisit the example and state what is missing. A memorised answer or simulated profit does not replace this explanation.
Check the skill across three cases
Answer with figures or specific choices. Feedback identifies the error and proposes a task. Checking happens in this browser without sending answers to the server. Saving identifiers and outcomes to resume learning is optional in My learning.
Your answers are not saved. Counters and identifiers are only kept locally if you enable saving in My learning.
A correct case only establishes that you solved this case. Repeating it or viewing the solution changes the evidence; it does not establish mastery or readiness to risk real money.
Sources and references
Chezur examples and explanations are educational. Consult the original source to verify conditions, data and updates.
Context and review of this explanation
How do I convert points and quantity into a net currency outcome?
- Topics
- Units and costs
- Level
- Beginner
- Skills
- Calculate with units and costs
- Examples
- Hypothetical situations illustrating the concept.
- Specialist review
- Not documented for this edition. Automated structure and internal-link checks do not establish specialist review.