The profit and loss calculation for London Gold revolves around three key variables: price movement, the contract unit of 100 ounces per lot, and trading lot size. For long positions, subtract the entry ask price from the exit bid price. For short positions, subtract the exit ask price from the entry bid price.
Example of a Long Position
Suppose you buy 0.1 lot of London Gold at an entry ask price of $4300.15 and close the position later at a bid price of $4310.00. The price movement is $9.85. The theoretical profit and loss is calculated as: 9.85 × 100 × 0.1 = $98.5.
Example of a Short Position
Suppose you open a short position of 0.1 lot at a bid price of $4300.00 and close it later at an ask price of $4290.15. The price movement is also $9.85. The theoretical profit and loss is approximately $98.5.
Why You Cannot Use the Same Quote for Calculation
Different quote sides are used for opening/closing long trades and opening/closing short trades. The spread is embedded between the bid and ask prices. If you only refer to a single price shown on the K-line chart, your manual calculation will likely not match your trading records.
Additional Charges for Overnight Positions
Overnight fees may be incurred if an order crosses the settlement time. Such charges must be calculated separately when holding positions for multiple days. Therefore, full post-trade reviews should refer to actual closing results, while formulas are for quick estimation only.
Calculate Risk Before Calculating Target Profit
The same formula can be applied in reverse before opening a position. For example, with 0.1 lot and a planned stop-loss distance of $15, the theoretical risk is approximately $150. If this amount exceeds your risk tolerance, reduce your lot size before opening the trade instead of trying to fix it afterwards.
Calculation for a Long Order
Assume the London Gold ask price is $4300.15, and you buy 0.2 lot. Later, the bid price rises to $4312.00 and you close the position. The price difference for the long trade is 4312.00 minus 4300.15, equal to $11.85. 0.2 lot equals 20 ounces, so the theoretical monetary change is 11.85 × 20, roughly $237. Overnight fees and other charges are excluded here to clarify the basic calculation formula.
Calculation for a Short Order
Assume you open a short position of 0.2 lot at a bid price of $4310.00. Gold then falls, and the ask price reaches $4298.15. The price difference for the short trade is 4310.00 minus 4298.15, also $11.85. Multiply by 20 ounces, and the theoretical price gain is about $237. Trade directions differ, but as long as the price moves favourably for your position, the formula can be simplified to: favourable price difference × contract quantity.
What Happens When Your Market Call Is Wrong
If you open a long trade at $4300.15 and the bid price later drops to $4290.00, the price difference is -$10.15. For 0.2 lot (20 ounces), the theoretical floating loss is approximately $203. The opposite applies to short trades; price increases create adverse price gaps. The most common mistake when applying formulas is reversing the subtraction order for long and short positions. Therefore, always check the trade direction first when reviewing trades.
Why Manual Calculation Slightly Differs From Account Results
Actual account results may also include overnight interest, execution price variance and other factors. Overnight charges will be added if the position crosses settlement time. During rapid market swings, the actual filled price may differ from the quote selected for manual calculation.
Manual calculations help you verify logic and position size, while your final statement is subject to trade history. Especially around major data releases, do not derive trade results purely from price points captured in chart screenshots.
Simplified Formula Summary
For long orders: Exit bid price minus entry ask price. For short orders: Entry bid price minus exit ask price. Multiply the result by 100 ounces and lot size. Remember this rule, and you can verify most basic London Gold profit and loss calculations by yourself.
Separate Trade Plan From Actual Outcome
Before opening a position, calculate theoretical risk: lot size, stop-loss level in US dollars, and maximum acceptable loss. After closing the trade, calculate the real outcome: actual entry price, actual exit price, overnight fees and final P&L. This helps identify whether issues stem from market judgement, execution or accumulated costs. For long-term trade reviews, merely noting a $237 profit tells you little about whether the trade followed your original plan. Recording your planned risk reveals whether gains came from excessive position sizing.
Risk Warning: The examples exclude all fees and execution slippage and serve only to illustrate calculation logic.