2024-10-28 11:14:28For traders, it’s an important step to know how to calculate profit and loss before placing an order. The following is a guide to help you better understand the relationship between different variables, and profit and loss calculations. Please note that all USDC Perpetual and Futures Contracts are settled in USDC.
Average Entry Price
The average entry price of the USDC Perpetual and Futures Contract is the weighted average price of your position during the current settlement cycle, which will be affected by the increases in position size. At the end of each settlement cycle, the Mark Price at the time of settlement will become the new average entry price.
Formula
Average Entry Price = Total Session Value/Total Trade Size
Total Session Value = (Entry Price 1 × Trade Size 1) + (Entry Price 2 × Trade Size 2) …
Example
Trader A holds a long position of 0.5 BTC with an entry price of $50,000. Believing that the price of BTC will continue to rise, Trader A decides to increase the long position by opening another 0.8 BTC at an entry price of $51,000.
Total Session Value = (50,000 × 0.5) + (51,000 × 0.8) = 65,800 USDC
Average Entry Price = 65,800/(0.5 + 0.8) = $50,615.38
Unrealized P&L
Unrealized P&L is the current profit or loss of open positions in the session settlement. Based on the direction of your position — long or short — the formula used to calculate the unrealized profit and loss will be different. Unrealized P&L will be refreshed every eight (8) hours at settlement time.
Long Position
Formula
Unrealized P&L = (Current Mark Price - Average Entry Price) × Position Size
Example
Trader B holds a long position of 0.6 BTC with an average entry price of $55,000. When the Mark Price is $58,000, the unrealized profit and loss will be (58,000 − 55,000) × 0.6 = 1,800 USDC.
Short Position
Formula
Unrealized P&L = (Average Entry Price - Current Mark Price) × Position Size
Example
Trader C holds a short position of 0.2 BTC with an average entry price of $53,000. When the Mark Price is $54,000, the unrealized profit and loss will be (53,000 − 54,000) × 0.2 = −200 USDC.
ROI
Return on investment (ROI) is an indicator used to evaluate the performance of your investment.
Long Position
Formula
ROI = [(Mark Price − Entry Price) × Position Size/ Initial Margin] × 100%
Initial Margin = Position Size × Entry Price/Leverage
Example
Revisiting Trader B’s case, who holds a long position of 0.6 BTC with an entry price of $55,000. When the Mark Price is $58,000, the unrealized profit and loss will be 1,800 USDC [(58,000 − 55,000) × 0.6].
Assuming that Trader B uses 10x leverage:
Initial Margin = 0.6 × 55,000/10 = 3,300 USDC
ROI = (1,800/3,300) × 100% = 54.545%
Short Position
Formula
ROI = [(Entry Price − Mark Price) × Position Size/ Initial Margin] × 100%
Initial Margin = Position Size × Entry Price/Leverage
Example
Revisiting Trader C’s case, who holds a short position of 0.2 BTC with an entry price of $53,000. When the Mark Price is $54,000, the unrealized profit and loss will be −200 USDC.
Assuming that Trader C uses 10x leverage:
Initial Margin = 0.2 × 53,000/10 = 1,060 USDC
ROI = (−200/1,060) × 100% = −18.868%
Realized P&L
Realized P&L includes the realized P&L upon settlement, closed positions, funding fees, and trading fees.
Read More
8-Hour Session Settlement Mechanism (USDC Contract)
Perpetual & Futures Contract: Fees Explained
Funding Fee Calculation
Formula
Realized P&L = Position P&L - Realized Trading & Funding Fees + Realized P&L at settlement
Position P&L (Long) = (Exit Price - Average Entry Price) × Position Size
Position P&L (Short) = (Average Entry Price - Exit Price) × Position Size
Example
|
|
Realized P&L |
Total Realized P&L |
|
Trader D holds a long position of 1.5 BTC with an entry price of $50,000. |
Fee to Open = Position Size × Entry Price × Fee Rate = 1.5 × 50,000 × 0.055% = 41.25 USDC |
- 41.25 USDC |
|
At 08:00 UTC settlement time, the Mark Price reached $51,000. Assuming the Funding Rate is 0.01%. The new Average Entry Price will then be updated to $51,000. |
Realized P&L at Settlement = (51,000 - 50,000) × 1.5 = 1,500 USDC Funding Fee = (51,000 × 1.5 × 0.01%) = 7.65 USDC |
-41.25 + 1,500 - 7.65 = 1,451.10 USDC |
|
Trader D closes a partial position (1 BTC) at $50,500. |
Position P&L = (50,500 - 51,000) × 1 = -500 USDC Fee to Close = 1 × 50,500 × 0.055% = 27.775 USDC |
1,451.10 - 500 - 27.775 = 923.325 USDC |
To check the position P&L history, traders can visit here. Please refer to the transaction log for more details on the total realized P&L and wallet balance changes.
The profit and loss calculation of USDC Futures works similarly to USDC Perpetual Contracts. However, if the trader does not manually close the USDC Futures position and holds it until the contract is settled, no settlement fee will be charged.
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