Turnover is an essential metric in trading that helps measure the total volume of transactions. It is calculated based on the notional volume of closed positions. Below, we explain how turnover is calculated, along with practical examples.
Turnover Calculation Formula
To determine turnover, we calculate the Notional Volume (USD) using the following formula:
Notional Volume (USD) = Trading Lot * Contract Size * Closing Price of the Underlying Asset * End of Day Product Exchange Rate
To express the notional volume in millions, we use:
Notional Volume in millions (USD) = Notional Volume (USD) / 1,000,000
Note:
- Turnover is measured only on closed positions.
- The closing price and closing lots are used in the calculation.
Examples of Turnover Calculation
Example 1: Trading Gold (XAUUSD)
A trader closes 2 lots of XAUUSD with a closing price of $2,600 per ounce. The contract size for XAUUSD is 100, and the exchange rate is 1.
Calculation: 2 * 100 * 2600 * 1 = $520,000
Notional Volume in millions (USD): 520,000 / 1,000,000 = 0.52 million USD
Example 2: Trading NZDCAD
A trader closes 0.5 lots of NZDCAD with a closing price of 0.82653, a contract size of 100,000, and an exchange rate of 0.72902.
Calculation: 0.5 * 100,000 * 0.82653 * 0.72902 = $30,128
Notional Volume in millions (USD): 30,128 / 1,000,000 = 0.0301 million USD