What is PnL?

Back to Part 6

PnL refers to your profit or loss on any given trade or position. This number is shown near the bottom of your screen, below your wallet and open position details.

(The image above shows BTSE’s Testnet, so the numbers and calculations in the image may not be accurate.)


The money you make on each trade or position is your profit, and the money you lose on each trade is your loss. It’s as simple as that.


It can become slightly more complicated, however, when looking at your unrealized PnL percentages and dollar values. Unrealized PnL is the money you stand to make on a trade if you close your current position. BTSE constantly updates this number as asset prices fluctuate. This number also may not be exactly accurate when your position fully closes, depending on the order book liquidity and order type. BTSE lists your unrealized PnL in dollars below your wallet details, and in percentage below your open position details. This PnL percentage is based on the amount of leverage at play in any open position.


Say you have $1,000 in your BTSE Bitcoin Perpetual Futures Contract (BPFC) trading wallet. You enter a 1,000 contract (1 BTC) long position using 100x leverage while Bitcoin trades at $10,000. You now have $100 allocated to that trade, responsible for the price movement of one entire Bitcoin. If Bitcoin drops down to $9,950, your position is down $50, and you lose $50 if you close that position at that moment. This dollar amount is shown on the left side of the page under the wallet section, classified as unrealized PnL.


Leverage also affects your PnL percentage. Using the same example, if Bitcoin moves down to $9,950 as mentioned, your PnL is -50% (labeled in red text), which is 50% less than the $100 you put into that position. Closing the position with Bitcoin at $9,950 nets you a loss of $50, leaving your wallet balance at $950, down $50 from your original $1,000. This gives you a realized PnL (loss in this case) of $50, which is a 50% loss for that trade, resulting in a 5% decrease in your initial $1,000 wallet balance.


Alternatively, under the same parameters, if Bitcoin moves up to $10,050 after you enter your long position, your PnL sits at 50% (labeled in green text), meaning you have $50 in profit at that point (50% of $100). Closing the position while Bitcoin is still at $10,050 nets you a $50 profit, bringing your wallet balance up to $1,050. This gives you a realized PnL (profit in this case) of $50, which is a 50% profit for that trade, resulting in a 5% increase in your initial $1,000 wallet balance.

Formula For Calculating Unrealized PnL:

Longs = (Current Mark Price - Position Entry Price) x Contract Multiplier (0.001) x Contract Size


Subtract your position entry price from the mark price the asset is currently trading at. Mark price is listed under your open position, to the right of your listed entry price. Take the difference between your entry price and the mark price and multiply it by 0.001, which is the contract multiplier. (Each BPFC is 1/1000 of 1 BTC, or 0.001.) Multiply that number by the number of contracts involved in that position.

___________________

Example

You enter a 500 BPFC long position while BTC is trading at $9,000.

Bitcoin’s mark price then moves up to $9,500 while your position is still open.

You calculation for this position is as follows: (9,500 - 9,000) x 0.001 = 0.5 x 500 = 250 in profit.

___________________

Shorts = (Position Entry Price - Current Mark Price) x Contract Multiplier (0.001) x Contract Size


Subtract the asset’s current mark price from the price at which you entered the position. Take that number and multiply it by the contract multiplier (0.001). Multiply that number by the number of contracts involved in that position.

___________________

Example

You enter a 100 BPFC short position while BTC is trading at $9,000.

Bitcoin’s mark price moves down to $8,500 while your position is still open.

You calculation for this position is as follows: (9,000 - 8,500) x 0.001 = 0.5 x 100 = 50 in profit.

___________________


Formula For Calculating Realized PnL:

Longs = (Market Price - Position Entry Price) x Contract Multiplier (0.001) x Contract Size


Shorts = (Position Entry Price - Market Price) x Contract Multiplier (0.001) x Contract Size


The only difference in this calculation is the use of market price instead of mark price. You can find the market price listed in the middle of the order book with a percentage number next to it. This number’s color fluctuates between green and red, depending on the asset’s price movements up and down.


Mark price can be found listed under the chart for the asset you are trading, as well as under your open position details to the right of your listed entry price. Mark price is designed to represent fair value of each derivative product. This price is meant to be manipulation resistant, and therefore is the basis on which specific actions take place regarding your trading positions.


Position profit-and-loss calculations, margin calls, and liquidation logic are all based on the Mark price of the derivative product you are trading.


Continue to Part 8

Categories

Company

Community

© 2019-2020 BTSE.com All rights reserved