Assets and Profit/Loss Calculation for a Perpetual Futures Contract

Futures Assets

Futures assets refer to the real asset balance of a user’s futures account, which specifically are the sum of deposit + realized profit and loss (PnL) + unrealized profit and loss.

 

Total Margin

Futures assets in users’ futures accounts will be entirely used as margin.

 

Entry Price

The Entry Price is a combination of an average cost price and the real cost price for opening a futures order. The price will be used to calculate unrealized profit and loss of users’ futures positions. Meanwhile, futures positions of the same token in one direction (long or short) will be calculated altogether. For instance, if you open a long position of 10 BTC contracts at the price of 10,000 USDT and a long position of 10 BTC contracts at the price of 12,000 USDT, your entry price equals to 11,000 USDT in the calculation of “10,000 USDT * 10 + 12,000 USDT * 10/ 10+10”. 

 

Unrealized Profit and Loss

The Unrealized Profit and Loss refers to an estimated gain or loss of traders’ positions. It is an estimated PnL amount calculated by the mark price after the closing of the positions. Subject to the real-time mark price, it is also called paper profit or loss. The unrealized profit and loss is a reference but not the real gain or loss after the closing of positions. 

The unrealized profit and loss is calculated based on the gap between the entry price and the mark price. Please see below for details:

Unrealized profits and loss of long positions = (mark price – entry price) * positions

Unrealized profits and loss of short positions = (entry price – mark price) * positions 

For example, if you open a long position of 10 BTC contracts with the average entry price of 10,000 USDT. When the BTC mark price rises to 12,000 USDT, the unrealized profit and loss of your positions is 20,000 USDT in the calculation of “(12,000 USDT – 10,000 USDT) * 10”.

 

The Realized Profit and Loss

The realized profit and loss refers to a real gain or loss when users close their positions. Realized profits can be used as collateral and be withdrawn. 

The realized profit and loss is the difference between the entry price and the mark price. Please see below for details:

For long positions, an unrealized profit and loss = (close price – entry price) * positions

For short positions, an unrealized profit and loss = (entry price – close price) * positions

For example, if you opened a long position of 10 BTC contracts with an entry price of 10,000 USDT and closed the position when BTC dropped to 8,000 USDT, the realized profit and loss of your position equals (10,000 USDT – 8,000 USDT) * 10.

 

The Unrealized PnL Counted as Realized PnL

The unrealized profit and loss will be counted as the realized profit and loss under the following circumstances:

1. Close a position or open an opposite position, specifically converting a net long position to a net short position or vice versa.

2. The unrealized profit and loss will be counted as the realized profit and loss every 15 minutes once the absolute value of unrealized PnL exceeds 1% of collateral balance and worth at least 10 USDT. 

The unrealized profit or loss (>0) will be credited to users’ account as collateral only when it is counted as the realized profit and loss. The profit and loss will be calculated in USDT at the market price.

 

Position PnL and ROR

A Position Profit and Loss refers to gains or losses of current positions since they were opened. A rate of return (ROR) refers to the ratio of gains to costs of open orders. 

ROR will be calculated as follows:

ROR of long positions: (mark price / entry price - 1) * futures leverage

ROR of short positions: (1 - mark price / entry price) * futures leverage

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