Support Centre for Saxo Bank Switzerland

How is Conversion P/L calculated?

Stocks are cash products, so if you buy a USD denominated stock for example from a CHF denominated account, your profit or loss will be influenced also by how the USDCHF exchange rate changes while you have the position open.

Let's examine the below example of a position in the United States Oil Fund, LP (USO:arcx) where 46 shares were bought on a CHF account on the 11th of December 2014. By the 16th of February, the ETF had fallen from 22.69 to 19.62 - meaning the client was losing on the trade itself.

Besides that, a further loss has been accrued due to the CHF strengthening against the USD over the 2 months since the shares had been bought, so now the rate applied on the conversion back into the account was less favorable (0.92661365 vs. 0.97438770 when the position was originally opened.) These rates take into account any conversion cost applied.

How to calculate the "Conversion P/L" shown in the Position Details, steps:

1) Calculate the difference between the Open and the Close conversion rate
2) Multiply the current market value of the position (in the instrument currency) by the difference between the 2 conversion rates.

In the below example:

1) (0.92661365-0.97438770) = -0.04777405
2) -0.04777405 x 902.52 =  -43.117035606 CHF (rounded to -43.12 CHF)

Click to view in full screen: 

Also FX Options and Contract Options will display a "Currency Conversion P/L". This is because when they are traded (bought or sold) option premiums are also effectively taken from or added to the cash balance, just like when a stock or bond is bought or sold on the account.

For a full overview of how stock P/L is calculated see the attached PDF.


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