Calculating Account Equity and Profit/Loss in Coin-Margined Futures Contracts

Understanding Contract Account Equity

Contract account equity represents the total value of a user's holdings in a specific futures contract. It's calculated using this formula:

Contract Account Equity = Account Balance + Realized P&L (This Week) + Unrealized P&L (This Week)

Key Components Explained

1. Account Balance
   Refers to the amount of cryptocurrency held in the futures account, transferred from the spot wallet. During settlement, realized profits/losses adjust this balance.

2. Unrealized P&L
   Reflects the floating profit/loss of currently open positions, changing with market prices.

   Calculation Methods:

   • Long Position:
     (1/Entry Price - 1/Last Price) × Contract Quantity × Contract Face Value
   • Short Position:
     (1/Last Price - 1/Entry Price) × Contract Quantity × Contract Face Value

   Example:
   100 BTC quarterly contracts (face value $100) with average entry at $5,000. At $8,000 last price:
   (1/5000 - 1/8000) × 100 × 100 = 0.75 BTC profit

3. Realized P&L
   Captures closed-position profits/losses and trading fees before settlement. Funds remain locked until contract expiry.

   Closing Calculations:

   • Long Position:
     (1/Entry Price - 1/Closing Price) × Contracts Closed × Face Value
   • Short Position:
     (1/Closing Price - 1/Entry Price) × Contracts Closed × Face Value

   Example:
   Closing 100 contracts at $4,000 (from $5,000 entry):
   (1/5000 - 1/4000) × 100 × 100 = -0.5 BTC loss
   Plus 0.05% taker fee: (100×100/5000)×0.0005 = 0.001 BTC fee

Advanced Pricing Concepts

Entry Price vs. Holding Price

• Entry Price: Average opening cost that remains constant
• Holding Price: Dynamic price recalculated during settlements/additions for P&L tracking

Scenario Analysis:

1. Opening 100 contracts at $10,000 + 200 at $11,000:
   Both prices initially equal at:
   [100×(100+200)] / [(100×100/10000)+(100×200/11000)] = $10,645.16

2. Post-settlement at $12,000:

   • Holding price adjusts to $12,000
   • Entry price stays at $10,645.16

3. Adding 200 contracts at $12,800:

   • New entry price: $11,413.74
   • New holding price: $12,307.69

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Performance Metrics

Position Returns

• Profit (Current Position):
  Combines settled profits and post-settlement unrealized P&L
  = (1/Entry Price - 1/Last Price) × Contracts × Face Value
• Return Rate:
  = Profit / Initial Margin Requirement

Example:
10x leverage on 100 contracts ($100 face value) at $10,000 → $11,500:

• Profit: 0.1304 BTC
• Return: 130.43%

Closed Position Analysis

• Closing P&L: Post-last-settlement profit only
• Total Return: Lifetime profit from opening to closing

Case Study:

1. Simple close at $11,000:

   • Both metrics show 0.0909 BTC profit

2. Post-settlement close at $13,000:

   • Closing P&L: 0.0641 BTC (last settlement to close)
   • Total Return: 0.2307 BTC (full duration)

FAQ Section

Q: Why does my holding price change after settlement?
A: This reset reflects the mark-to-market process where unrealized P&L becomes realized, starting fresh calculations for the next period.

Q: How are fees incorporated in P&L calculations?
A: Trading fees are deducted from realized P&L immediately upon trade execution.

Q: Does partial closing affect my average prices?
A: No - both entry and holding prices remain unchanged during partial liquidations.

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Key Takeaways

1. Regularly monitor both unrealized and realized P&L for accurate account assessment
2. Understand the distinction between entry price (historical) and holding price (dynamic)
3. Settlement events create important accounting breaks in position tracking
4. Total returns provide the complete picture across multiple settlement periods

All examples assume BTC contracts with $100 face value. Actual calculations may vary by exchange specifications.