Profit & Loss (PNL) Calculation
USDT based Margin
Floating PNL = [Contract Size * (Current Price - Entry Price)] / (Current Price*Exchange Rate)
Example 1:
"Choose USDT as the settlement currency to trade BTC/USDT contracts
At a price of 10,000 USDT for BTC/USDT, User A spends 10,000 USDT to open long and closes it at a price of 15000 USDT."
PNL(Profit and Loss) = [10000 * (15000-10000)] /(10000 * 1) = 5000 USDT
Crypto based Margin
Floating PNL = [Contract Size * (Current Price - Entry Price)/ (Current Price* Entry Price)] *Exchange Rate
Example 2:
"Choose BTC as the settlement currency to trade ETH/USDT contracts
At a price of 400 USDT for ETH/USDT, User A spends 10,000 USDT to open long and closes it at a price of 500 USDT. Suppose the spot rate of ETH/BTC is 0.03 at this time."
PNL (Profit and Loss) = [10000 * (500-400)/(400 * 500)] *0.03= 0.15 BTC
Liquidation
Traders may face liquidation in cryptocurrency futures. Beginners unfamiliar with cryptocurrency derivatives may find the execution of liquidation for their open positions confusing.
The Basics of Liquidation: Liquidation occurs when the margin balance falls below the maintenance margin.
Maintenance margin is the minimum amount of margin traders must maintain in order to keep their futures position open.
Liquidation price is the price at which a position will start going into liquidation. There are several factors that can influence this threshold, including the leverage used, the maintenance margin rate, the cryptocurrency’s current price, and the trader’s remaining account balance. When the contract's price surpasses the liquidation price, the liquidation process starts.
Conclusion: Liquidation occurs when an individual is unable to meet the required margin for their leveraged position on the market. To avoid liquidation, it’s advisable to closely watch your margin ratio, use leverage responsibly, avoid accumulating more contracts in a losing position, and utilize trading tools such as stop-loss orders.
Liquidation Price Calculation
Isolated Margin Mode
USDT based Margin
Long: [1-(Margin+Additional Margin)*1/(Contract Size*Contract Multiplier)+Maintenance Margin Rate)*Opening Price
Short: [1+(Margin+Additional Margin)*1/(Contract Size*Contract Multiplier)-Maintenance Margin Rate)*Opening Price
Crypto based Margin
Long: 1.0 / [(1.0 - Maintenance Margin Rate) / Opening Price + (Margin + Additional Margin) / (Contract Size * Exchange Rate)]
Short: 1.0 / [(1.0 + Maintenance Margin Rate) / Opening Price - (Margin + Additional Margin) / (Contract Size * Exchange Rate)]
Cross Margin Mode
USDT based Margin
Liquidation Price = (longQty - shortQty - cash * cxRate / refData.getValuePerUnit()) / (longQty / longPrice - shortQty / shortPrice - Math.abs(longQty / longPrice - shortQty / shortPrice) * maintenanceMarginRate)
Crypto based Margin
Liquidation price = (longQty - shortQty) / (longQty / longPrice - shortQty / shortPrice + cash / (refData.getValuePerUnit() * cxRate) - Math.abs(longQty / longPrice - shortQty / shortPrice) * maintenanceMarginRate)
If you have questions regarding this information, please contact the TruBit Team via our chat channel or email us Here and we'll be in touch!