Understanding how to calculate profit and loss (PnL) is crucial for anyone trading expiry futures contracts. This guide breaks down the essential formulas and concepts you need to know, using clear examples for both coin-margined and U-stablecoin-margined contracts.
Core Concepts in Futures Trading
Before diving into calculations, it's important to grasp a few fundamental terms that form the basis of all PnL formulas.
What is Position Size?
The position size refers to the number of contracts you hold. In One-way trading mode, long positions are represented by a positive number, while short positions are a negative number. In Hedge mode, both long and short position sizes are positive numbers.
Understanding Entry Price
Your average entry price changes when you add to a position or open a reverse position. It is also replaced by the settlement price upon settlement. The formulas below always use the absolute (positive) value for size.
- For Coin-margined contracts: The new entry price is calculated as (Current Size + Added Size) / (Current Size / Entry Price + Added Size / Added Size's Entry Price).
- For U-stablecoin-margined contracts: The new entry price is calculated as (Current Size x Entry Price + Added Size x Added Size's Entry Price) / (Current Size + Added Size).
Key Profit and Loss Formulas
Here are the primary formulas used to determine your standing and finalized profits or losses.
Floating PnL (Unrealized Profit and Loss)
This represents your current, unrealized gain or loss on an open position based on the mark price.
Coin-margined contracts:
- Long positions PnL: Face value x |Size| x Multiplier x (1／Entry price - 1／Mark price)
- Short positions PnL: Face value x |Size| x Multiplier x (1／Mark price - 1／Entry price)
U-stablecoin-margined contracts:
- Long positions PnL: Face value x |Size| x Multiplier x (Mark price - Entry price)
- Short positions PnL: Face value x |Size| x Multiplier x (Entry price - Mark price)
Floating PnL Ratio
This ratio shows your unrealized gain or loss as a percentage of the margin you've posted for the position.
- Formula: (Floating PnL / Position's margin) x 100%
Closed PnL (Realized from Closing)
This is the profit or loss you actually realize upon closing a position at a specific price.
Coin-margined contracts:
- Long positions PnL: Face value x |Size| x Multiplier x (1／Entry price - 1／Close price)
- Short positions PnL: Face value x |Size| x Multiplier x (1／Close price - 1／Entry price)
U-stablecoin-margined contracts:
- Long positions PnL: Face value x |Size| x Multiplier x (Close price - Entry price)
- Short positions PnL: Face value x |Size| x Multiplier x (Entry price - Close price)
Settlement PnL
Upon contract expiry, your position is settled at the official settlement price, crystallizing your final PnL for that contract.
Coin-margined contracts:
- Long positions PnL: Face value x |Size| x Multiplier x (1／Entry price - 1／Settlement price)
- Short positions PnL: Face value x |Size| x Multiplier x (1／Settlement price - 1／Entry price)
U-stablecoin-margined contracts:
- Long positions PnL: Face value x |Size| x Multiplier x (Settlement price - Entry price)
- Short positions PnL: Face value x |Size| x Multiplier x (Entry price - Settlement price)
Realized PnL (Total Realized Profit/Loss)
This is the complete picture of your realized gains or losses, incorporating everything from closed trades, settlements, and the costs of trading.
- Formula: Closed PnL + Settlement PnL + Trading Fee
Realized PnL Ratio
This metric expresses your total realized profit or loss as a percentage of the margin that was used for the now-closed position.
- Formula: (Realized PnL / Closed position's margin) x 100%
Practical Calculation Examples
Let's apply these formulas to real-world scenarios to see how they work in practice.
Calculating a New Entry Price
U-stablecoin-margined Example:
You hold a long BTC-USDT futures position of 10 contracts with an entry price of 100,000 USDT. You then add 5 more contracts at a fill price of 160,000 USDT.
- New Entry Price: = (Current Size x Entry Price + Added Size x Added Size's Entry Price) / (Current Size + Added Size)
- Calculation: = (100,000 x 10 + 160,000 x 5) / (10 + 5) = 120,000 USDT
Coin-margined Example:
You hold a short BTC-USD futures position of 10 contracts with an entry price of 100,000 USD. You add 5 more short contracts at a fill price of 80,000 USD.
- New Entry Price: = (Current Size + Added Size) / (Current Size / Entry Price + Added Size / Added Size's Entry Price)
- Calculation: = (10 + 5) / (10 / 100,000 + 5 / 80,000) ≈ 92,307 USD
Calculating Floating PnL
U-stablecoin-margined Example:
You are long on BTC-USDT futures. The face value is 0.01 BTC, the multiplier is 1, and your size is 10 contracts. Your entry price was 100,000 USDT and the current mark price is 160,000 USDT.
- Long PnL: = Face value x |Size| x Multiplier x (Mark price - Entry price)
- Calculation: = 0.01 x 10 x 1 x (160,000 - 100,000) = 6,000 USDT
Coin-margined Example:
You are short on BTC-USD futures. The face value is 100 USD, the multiplier is 1, and your size is 1,000 contracts. Your entry price was 100,000 USD and the current mark price is 80,000 USD.
- Short PnL: = Face value x |Size| x Multiplier x (1／Mark price - 1／Entry price)
- Calculation: = 100 x 1000 x 1 x (1 / 80,000 - 1 / 100,000) = 0.25 BTC
Calculating Floating PnL Ratio
U-stablecoin-margined Example:
Your long position has a current floating PnL of 6,000 USDT. The margin you have allocated to this position is 1,600 USDT.
- Floating PnL Ratio: = (Floating PnL / Position's margin) x 100%
- Calculation: = (6,000 / 1,600) x 100% = 375%
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Frequently Asked Questions
What is the difference between Floating PnL and Realized PnL?
Floating PnL shows your current unrealized profit or loss on open positions, which changes with the mark price. Realized PnL is the actual profit or loss you have locked in from closing positions, settlements, and after accounting for all trading fees.
Why does my entry price change when I add to a position?
Adding to a position at a different price changes your average entry cost. The calculation blends your original position's value with the new trade's value to find a new volume-weighted average price, which is crucial for accurate PnL tracking.
How is Settlement PnL different from Closed PnL?
Closed PnL occurs when you actively close a position at a market price. Settlement PnL happens automatically when a futures contract reaches its expiry date and all open positions are closed at the predetermined official settlement price.
What does a negative PnL ratio mean?
A negative PnL ratio indicates that your position is currently losing money relative to the amount of margin you've used. A negative Floating PnL Ratio means an unrealized loss, while a negative Realized PnL Ratio means you have closed a position for a net loss.
Is leverage considered in these PnL formulas?
Leverage itself is not a direct variable in the PnL formulas. Instead, leverage affects the amount of margin you are required to post. The PnL is calculated based on the price movement and position size, and the resulting gain or loss is then compared to your margin to show the amplified effect of leverage.
Do these formulas apply to both perpetual and expiry futures?
The core formulas for calculating PnL based on price movement are similar. However, expiry futures have a settlement event and a final settlement price, which is a key difference from perpetual futures that use funding rates to track the index price.
This document is for informational purposes only and is not intended to provide investment, tax, or legal advice. Digital asset investments and leveraged trading carry significant risk, including the potential for substantial losses. Performance history is not a predictor of future results. You are solely responsible for your trading decisions and should ensure any activity is suitable for your financial situation. Not all products are available in every region.