1. What is Daniel's Formula?

Daniel's Formula is a simple method to calculate profit or loss (P/L) in futures trading. It takes into account the price difference, contract size, and number of contracts to determine the total profit or loss.

2. How Does the Calculator Work?

The calculator uses Daniel's Formula:

Where:

• \( Exit\ Price \) — Price at which position is closed (USD)
• \( Entry\ Price \) — Price at which position is opened (USD)
• \( Contract\ Size \) — Size of one contract (units)
• \( Number\ of\ Contracts \) — Quantity of contracts traded

Explanation: The formula calculates the difference between exit and entry prices, then multiplies by the contract size and number of contracts to get total P/L.

3. Importance of P/L Calculation

Details: Accurate P/L calculation is crucial for futures traders to assess trade performance, manage risk, and make informed trading decisions.

4. Using the Calculator

Tips: Enter all values in USD for prices. Contract size depends on the specific futures contract (e.g., 100 for some index futures). Number of contracts must be a whole number.

5. Frequently Asked Questions (FAQ)

Q1: Does this work for both long and short positions?
A: Yes. For long positions, profit occurs when exit price > entry price. For short positions, profit occurs when exit price < entry price.

Q2: What about commissions and fees?
A: This calculator shows gross P/L. For net P/L, you would need to subtract trading commissions and fees.

Q3: Can this be used for other derivatives?
A: The basic principle applies to many derivatives, but contract specifications may vary.

Q4: How accurate is this calculation?
A: This provides the theoretical P/L. Actual P/L may vary slightly due to factors like slippage.

Q5: What's the difference between realized and unrealized P/L?
A: This calculator shows realized P/L for closed positions. Unrealized P/L would use current market price instead of exit price.