Understanding how to calculate profits in coin-margined contracts begins with grasping what these contracts entail. Many novice investors focus solely on cryptocurrency prices, overlooking critical aspects like contract types. This guide dives deep into coin-margined contracts—a perpetual contract type where trades are denominated in the underlying cryptocurrency (e.g., Bitcoin for BTC contracts). Below, we break down the calculation methods step by step.
Key Components of Coin-Margined Contract Profits
1. Equity in Coin-Margined Perpetual Accounts
Your perpetual account equity represents the total value of your holdings in a specific cryptocurrency. It’s calculated as:
Equity = Account Balance + Unrealized P&L
2. Account Balance
This reflects the amount of cryptocurrency held in your perpetual contract account, including transfers from your wallet. Realized gains/losses from trades adjust this balance during settlement.
3. Unrealized P&L
This shows the profit or loss of your open positions, fluctuating with market prices.
- Long Position:
(1 / Entry Price − 1 / Mark Price) × Contract Size × Contract Face Value - Short Position:
(1 / Mark Price − 1 / Entry Price) × Contract Size × Contract Face Value
Example: If you hold 100 BTC contracts (face value: 1 USD) at an average entry of 5,000 USD/BTC, and the current price is 8,000 USD/BTC:
Unrealized P&L = (1/5000 − 1/8000) × 100 × 1 = 0.0075 BTC
4. Realized P&L
This includes closed-position profits, trading fees, and funding rates, adjusted into your account balance post-settlement.
Example: Closing 100 BTC contracts at 4,000 USD (entry: 5,000 USD):
Realized P&L = (1/5000 − 1/4000) × 100 × 1 = −0.005 BTC
Fee (0.075%) = (1 × 100 / 4000) × 0.075% = 0.00001875 BTC
5. Average Entry Price
The weighted average cost of your positions, unaffected by settlements.
Example: Buying 100 contracts at 10,000 USD and 200 at 11,000 USD:
Average Price = [1 × (100 + 200)] / [(1 × 100 / 10000) + (1 × 200 / 11000)] ≈ 10,645.1 USD
6. Position Yield and ROI
- Yield: Current profit of open positions.
- ROI:
Yield / Position Margin
Example: 10x leverage on 100 BTC contracts (entry: 10,000 USD), price rises to 11,500 USD:
Yield = 0.001304 BTC
ROI = 130.43%
FAQs
Q1: What’s the difference between realized and unrealized P&L?
A: Realized P&L reflects closed trades, while unrealized P&L shows live position performance.
Q2: How does leverage impact coin-margined contracts?
A: Higher leverage amplifies both gains and losses. Always manage risk with stop-loss orders.
Q3: Why is the account balance adjusted during settlement?
A: Settlement converts unrealized P&L into realized P&L, updating your balance accordingly.
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Risk Management Tips
- Maintain a risk reserve fund to cover potential liquidation losses.
- Study historical case analyses to refine your strategy.
- Explore our contract trading tutorials for deeper insights.
By mastering these calculations and risks, you’ll navigate coin-margined contracts with confidence. For further learning, check out our structured courses on perpetual contracts.
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