<p>Gross margin, a fundamental concept in trading, is the difference between the selling price and the cost of goods sold, expressed as a percentage of the selling price. It's a key metric that reflects a company's profitability per sale. In the context of trading, gross margin helps traders understand the potential profit from a single trade.</p>

<h2>How It Works</h2>
<p>Gross margin is calculated using the following formula:</p>
<table>
<tbody>
<tr>
<td><strong>Gross Margin</strong></td>
<td>=</td>
<td>(Selling Price - Cost of Goods Sold) / Selling Price</td>
</tr>
<tr>
<td>Or, as a percentage:</td>
<td>=</td>
<td>(Selling Price - Cost of Goods Sold) / Selling Price * 100</td>
</tr>
</tbody>
</table>
<p>For example, if a trader buys a currency pair at $1.20 and sells it at $1.25, the gross margin would be:</p>
<table>
<tbody>
<tr>
<td><strong>Gross Margin</strong></td>
<td>=</td>
<td>($1.25 - $1.20) / $1.25 * 100 = 4%</td>
</tr>
</tbody>
</table>

<h2>Why It Matters for Traders</h2>
<p>Understanding gross margin is crucial for traders for several reasons:</p>
<ul>
<li>It helps traders determine the potential profit from a single trade.</li>
<li>It indicates the risk-reward ratio. A high gross margin suggests a higher potential reward for the risk taken.</li>
<li>It helps traders compare the profitability of different trading instruments.</li>
</ul>
<p>On the <strong>MetaTrader 5</strong> platform, traders can calculate gross margin using the formula in the platform's built-in calculator or by using custom indicators.</p>

<h2>Example</h2>
<p>Let's say a trader is considering two trades:</p>
<ul>
<li>Trade 1: Buys EUR/USD at 1.1850, sells at 1.1900. Gross margin = (1.1900 - 1.1850) / 1.1900 * 100 = 0.42%</li>
<li>Trade 2: Buys GBP/USD at 1.3550, sells at 1.3600. Gross margin = (1.3600 - 1.3550) / 1.3600 * 100 = 0.37%</li>
</ul>
<p>In this case, Trade 1 has a higher gross margin, indicating a potentially higher profit per trade.</p>

<h2>Key Takeaways</h2>
<ul>
<li>Gross margin is a simple yet powerful tool for traders to estimate potential profit.</li>
<li>It's calculated as (Selling Price - Cost of Goods Sold) / Selling Price.</li>
<li>Traders can use gross margin to compare the profitability of different trades.</li>
<li>MetaTrader 5 platform supports gross margin calculations.</li>
</ul>