Strategy tester profit calculation - Is it a bug?

[Forex Trader]

Hi,

I recently downloaded MT4 and started developing my own scripts.

I ran the Strategy tester on some simple expert adviser.
Here are some lines from the report produced by MT4: (I removed some of the non relevant information)

Line#		Date & Time	ID	Lots	Rate	Profit
1	buy	2005.01.03 04:08	1	0.10	1.3482	0
2	sell	2005.01.03 08:33	2	0.10	1.3486	0
3	buy	2005.01.03 14:48	3	0.10	1.3470	0
4	sell	2005.01.11 01:30	4	0.10	1.3125	0
...
12	close	2005.02.02 03:08	1	0.10	1.3072	-410.00
14	close	2005.02.03 14:00	2	0.10	1.2992	494.00
16	close	2005.02.04 14:30	3	0.10	1.3042	-428.00
18	close	2005.02.04 14:50	4	0.10	1.2939	186.00

I was wondering how did MT4 calculate the profit. After a short time I found the answer.

The formula MT4 uses for calculating the profit is: (sell - buy)*investment // where investment is lots*lotSize

For example:

ID	Buy rate	Sell rate	lots*lotSize	Formula	Result
1	1.3482	1.3072	10000	(1.3072-1.3482)*10000	-410
2	1.2992	1.3486	10000	(1.3486-1.2992)*10000	494
3	1.3470	1.3042	10000	(1.3042-1.3470)*10000	-428

As you can see with this formula I got the same results as MT4. This is the formula MT4 uses.

Now, lets try this formula on some simple examples:

Case	Type	Open	Close	Formula	Result
1	long	1	2	(2-1)*10000	10000
2	long	2	1	(1-2)*10000	-10000
3	short	2	1	(2-1)*10000	10000
4	short	1	2	(1-2)*10000	-10000

It looks to me that these results are wrong.
Take cases 2 and 4 for example:
If you buy something at price 2 and sell the same thing for price 1
you should lose half of your investment not all of it. In this case your profit should be -5000 not -10000.

If I understand correctly, the correct formula for calculating the profit is: ((investment/buy)*sell) - investment
With this formula for the same cases we get:

Case	Type	Open	Close	Formula	Result
1	long	1	2	(10000/1)*2 - 10000	10000
2	long	2	1	(10000/2)*1 - 10000	-5000
3	short	2	1	(10000/1)*2 - 10000	10000
4	short	1	2	(10000/2)*1 - 10000	-5000

As for my understanding these are the correct results and not the results we got from formula used by MT4.
If I use this formula on the lines from the MT4 report I get completely different results:

ID	Buy rate	Sell rate	lots*lotSize	Formula	Result
1	1.3482	1.3072	10000	(10000/1.3482)*1.3072 - 10000	-304.11
2	1.2992	1.3486	10000	(10000/1.2992)*1.3486 - 10000	380.23
3	1.3470	1.3042	10000	(10000/1.3470)*1.3042 - 10000	-317.74

Is this a bug in MT4????
Am I missing something?

EP.

[Forex Trader]

See article Forex Trading ABC