Understanding how profits and losses are calculated is crucial before placing any trades. This guide explains the relationship between key variables and the formulas used for P&L calculations. Note that all USDC perpetual and futures contracts are settled in USDC.
Key Concepts
- Entry Price
- Unrealized P&L
- Return on Investment (ROI)
- Realized P&L
Entry Price
The entry price for USDC perpetual and futures contracts represents the weighted average price of your position during the current settlement cycle. This value changes when adding to your position. At each settlement (every 8 hours), the mark price becomes the new entry price.
Calculation Formula
Entry Price = Total Position Value / Total Contract Quantity
Where:
Total Position Value = (Price₁ × Quantity₁) + (Price₂ × Quantity₂) + ...
Example
Trader A opens a 0.5 BTC long position at $50,000, then adds 0.8 BTC at $51,000:
- Total Position Value = (50,000 × 0.5) + (51,000 × 0.8) = 65,800 USDC
- Entry Price = 65,800 / (0.5 + 0.8) = $50,615.38
Unrealized P&L
Unrealized P&L reflects the profit/loss of open positions at settlement. Calculations differ for long and short positions.
Long Positions
Formula:
Unrealized P&L = (Mark Price − Entry Price) × Position Size
Example:
Trader B holds 0.6 BTC long at $55,000. If mark price reaches $58,000:
(58,000 − 55,000) × 0.6 = 1,800 USDC profit
Short Positions
Formula:
Unrealized P&L = (Entry Price − Mark Price) × Position Size
Example:
Trader C holds 0.2 BTC short at $53,000. If mark price rises to $54,000:
(53,000 − 54,000) × 0.2 = -200 USDC loss
Return on Investment (ROI)
ROI measures investment performance as a percentage of initial margin.
Long Positions
Formula:
ROI = [(Mark Price − Entry Price) × Position Size / Initial Margin] × 100%
Initial Margin = (Position Size × Entry Price) / Leverage
Example (10x leverage):
Trader B’s initial margin = (0.6 × 55,000)/10 = 3,300 USDC
ROI = (1,800 / 3,300) × 100% = 54.55%
Short Positions
Formula:
ROI = [(Entry Price − Mark Price) × Position Size / Initial Margin] × 100%
Example (10x leverage):
Trader C’s initial margin = (0.2 × 53,000)/10 = 1,060 USDC
ROI = (-200 / 1,060) × 100% = -18.87%
Realized P&L
Realized P&L combines position gains/losses, fees, funding rates, and settlement adjustments.
Calculation Components
- Position P&L (Long) = (Exit Price − Entry Price) × Position Size
- Position P&L (Short) = (Entry Price − Exit Price) × Position Size
- Total Realized P&L = Position P&L + Fees/Funding + Settlement P&L
Example Workflow
| Action | Calculation | Cumulative P&L |
|---|---|---|
| Open 1.5 BTC long at $50,000 | Opening Fee: 1.5 × 50,000 × 0.055% = 41.25 USDC | -41.25 USDC |
| Settlement at $51,000 | Settlement P&L: (51,000 − 50,000) × 1.5 = 1,500 USDC Funding Fee: 51,000 × 1.5 × 0.01% = 7.65 USDC | 1,451.10 USDC |
| Partial close (1 BTC at $50,500) | Position P&L: (50,500 − 51,000) × 1 = -500 USDC Closing Fee: 1 × 50,500 × 0.055% = 27.78 USDC | 923.33 USDC |
👉 Track your P&L history for detailed breakdowns.
FAQs
1. How often is unrealized P&L updated?
Unrealized P&L updates every 8 hours during settlement.
2. Are fees included in ROI calculations?
No, ROI only considers position gains relative to initial margin.
3. What happens to entry price at settlement?
The mark price becomes the new entry price.
4. How is funding fee calculated?
Funding Fee = Mark Price × Position Size × Funding Rate.
5. Do futures contracts charge settlement fees?
No, fees apply only to perpetual contracts.
For advanced strategies:
👉 Master USDC contract trading with real-world case studies.
All examples assume linear pricing. Leverage magnifies both gains and losses—trade responsibly.