<p>Profit margin, a key metric in trading, represents the difference between the selling price and the cost of a product or service, expressed as a percentage of the selling price. In the context of Forex and CFD trading, it's a measure of the profitability of a trade relative to its cost.</p>

<h2>How It Works</h2>
<p>To calculate profit margin, use the formula:</p>
<table>
<tbody>
<tr>
<td><strong>Profit Margin</strong></td>
<td>=</td>
<td><strong>Profit</strong></td>
<td>/</td>
<td><strong>Revenue</strong></td>
<td>× 100%</td>
</tr>
</tbody>
</table>
<p>Where:</p>
<ul>
<li><strong>Profit</strong> is the difference between the selling price and the cost price.</li>
<li><strong>Revenue</strong> is the selling price.</li>
</ul>
<p>For example, if you buy EUR/USD at 1.2000 and sell at 1.2100, your profit is 100 pips. If your trading cost (spread) is 2 pips, your profit margin is:</p>
<table>
<tbody>
<tr>
<td><strong>Profit Margin</strong></td>
<td>=</td>
<td>100</td>
<td>/</td>
<td>120</td>
<td>× 100%</td>
<td>= 83.33%</td>
</tr>
</tbody>
</table>

<h2>Why It Matters for Traders</h2>
<p>Understanding profit margin helps traders:</p>
<ul>
<li>Assess the potential return on investment (ROI) of a trade.</li>
<li>Compare the profitability of different trading strategies or instruments.</li>
<li>Set realistic expectations for their trades.</li>
</ul>

<h2>Example</h2>
<p>Consider two trades on STB Provider's MetaTrader 5 platform:</p>
<ul>
<li>Trade 1: Buy GBP/USD at 1.3500, sell at 1.3600, cost (spread) = 3 pips. Profit margin = 76.92%.</li>
<li>Trade 2: Buy EUR/USD at 1.2000, sell at 1.2100, cost (spread) = 2 pips. Profit margin = 83.33%.</li>
</ul>
<p>Even though the profit in pips is the same (100 pips), the profit margin is higher for Trade 2, indicating a more profitable trade.</p>

<h2>Key Takeaways</h2>
<ul>
<li>Profit margin is a crucial metric for evaluating trade profitability.</li>
<li>It's calculated as (Profit / Revenue) × 100%.</li>
<li>Higher profit margins indicate more profitable trades.</li>
<li>Profit margin helps traders make informed decisions about their trades.</li>
</ul>