Enter the dollar value of one-tick move ($/tick) and the total number of ticks since purchase into the calculator to determine the Commodity Profit.
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Commodity Profit Formula
The following formula is used to calculate the Commodity Profit.
CP = DV * T
- Where CP is the Commodity Profit ($)
- DV is the dollar value of one-tick move ($/tick)
- T is the total number of ticks since purchase
How to Calculate Commodity Profit?
The following example problems outline how to calculate Commodity Profit.
Example Problem #1:
- First, determine the dollar value of one-tick move ($/tick). In this example, the dollar value of one-tick move ($/tick) is given as 50.
- Next, determine the total number of ticks since purchase. For this problem, the total number of ticks since purchase is given as 2.2.
- Finally, calculate the Commodity Profit using the equation above:
CP = DV * #T
The values given above are inserted into the equation below:
CP = 50 * 2.2 = 110 ($)
FAQ
What is a “tick” in commodity trading?
A “tick” refers to the smallest possible price movement in the trading markets, particularly in commodities and futures trading. The dollar value of a tick varies between markets and contracts.
Why is calculating commodity profit important?
Calculating commodity profit is crucial for traders to understand the performance of their investments, manage risks, and make informed decisions about when to buy or sell their commodities based on market movements.
Can the formula for calculating commodity profit be used for any commodity?
Yes, the formula for calculating commodity profit (CP = DV * T) is versatile and can be used for any commodity as long as you know the dollar value of one-tick move and the total number of ticks since purchase. However, it’s important to note that the specific values for DV and T will vary depending on the commodity and the market conditions.
