Futures Profit Calculator
Use this calculator to determine the potential gross and net profit or loss for a futures trade, accounting for entry and exit prices, contract size, and commissions.
Results:
Gross Profit/Loss:
Total Commission:
Net Profit/Loss:
Understanding Futures Profit and Loss
Futures contracts are standardized legal agreements to buy or sell something at a predetermined price at a specified time in the future. They are widely used by traders and investors to speculate on the price movement of commodities, currencies, stock indices, and other financial instruments, or to hedge against price risk.
How Futures Profit/Loss is Calculated
The profit or loss from a futures trade is primarily determined by the difference between the entry price (the price at which you opened the position) and the exit price (the price at which you closed the position), multiplied by the contract's value per point (multiplier) and the number of contracts traded. Commissions and fees also play a significant role in determining the net profit or loss.
Key Components:
- Entry Price per Unit: This is the price at which you initially bought (for a long position) or sold (for a short position) one unit of the futures contract.
- Exit Price per Unit: This is the price at which you closed your position by selling (for a long position) or buying back (for a short position) one unit of the futures contract.
- Contract Multiplier (Value per Point): Each futures contract has a specific multiplier that defines the monetary value of one point or tick movement in the contract's price. For example, the E-mini S&P 500 futures contract has a multiplier of $50 per point. If the price moves by 1 point, the contract's value changes by $50.
- Number of Contracts: The total number of futures contracts you traded.
- Commission per Contract (Round Trip): This is the fee charged by your broker for opening and closing a single futures contract position. It's crucial to include this as it directly impacts your net profit.
The Calculation Formula:
The calculator uses the following logic:
- Price Difference:
Exit Price - Entry Price(for a long position) - Gross Profit/Loss:
Price Difference × Contract Multiplier × Number of Contracts - Total Commission:
Commission per Contract × Number of Contracts - Net Profit/Loss:
Gross Profit/Loss - Total Commission
Note: For a short position, the profit is made when the price falls, so the calculation would effectively be (Entry Price - Exit Price) × Contract Multiplier × Number of Contracts. Our calculator assumes a long position where profit is made when the exit price is higher than the entry price. If you enter a higher entry price than exit price, it will correctly show a gross loss.
Example Scenario: E-mini S&P 500 Futures
Let's consider a common futures contract, the E-mini S&P 500 (ES). This contract has a multiplier of $50 per point.
- Entry Price: 4500.00
- Exit Price: 4510.00
- Contract Multiplier: $50
- Number of Contracts: 2
- Commission per Contract (Round Trip): $4.00
Step-by-step Calculation:
- Price Difference: 4510.00 – 4500.00 = 10.00 points
- Gross Profit: 10.00 points × $50/point × 2 contracts = $1000.00
- Total Commission: $4.00/contract × 2 contracts = $8.00
- Net Profit: $1000.00 – $8.00 = $992.00
As you can see, even a small commission can impact your net profit, especially with a larger number of contracts or smaller price movements.
Why Use a Futures Profit Calculator?
- Pre-trade Analysis: Quickly assess potential profit or loss before entering a trade, helping you set realistic targets and stop-loss levels.
- Risk Management: Understand the financial implications of different price movements and contract sizes.
- Commission Impact: Clearly see how commissions affect your bottom line, which is crucial for high-frequency traders.
- Learning Tool: A great way for new futures traders to grasp the mechanics of profit and loss calculation.
Always remember that futures trading involves significant risk and is not suitable for all investors. Past performance is not indicative of future results.