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Bybit contract calculation formula

Bybit's comprehensive calculation formula empower traders to assess the potential profit or loss of futures contracts by considering factors such as contract value, mark price, funding rate, and position maintenance margin.

Nov 14, 2024 at 10:58 pm

Bybit Contract Calculation Formula

Bybit, a renowned cryptocurrency derivatives exchange, employs a robust calculation formula to determine the profit or loss on futures contracts. Understanding this formula empowers traders to accurately assess their risk and potential returns.

Contract Value:

  • The contract value represents the notional value of the underlying asset being traded.
  • It is calculated as: Contract Value = Contract Size x Mark Price

Mark Price:

  • The Mark Price is the current market price of the underlying asset, used for contract settlement.
  • It is constantly updated based on a weighted average of prices from multiple exchanges.

Unrealized PnL:

  • Unrealized PnL reflects the profit or loss that would be realized if the contract were closed at the Mark Price.
  • It is calculated as: Unrealized PnL = (Mark Price - Entry Price) x Contract Size

Realized PnL:

  • Realized PnL represents the profit or loss that has been realized when closing a contract position.
  • It is calculated as: Realized PnL = (Exit Price - Entry Price) x Contract Size

Funding Rate:

  • The Funding Rate is a periodic fee or rebate paid by long or short positions to maintain market balance.
  • It is calculated as a function of the interest rate difference between the asset and the funding rate of the contract.

Position Maintenance Margin:

  • The Position Maintenance Margin is the minimum margin required to keep a position open.
  • It is calculated as a percentage of the contract value and is subject to market volatility.

Liquidation Price:

  • The Liquidation Price is the point at which a position is automatically closed due to insufficient margin.
  • It is calculated as: Liquidation Price = Entry Price +/- (Margin Ratio x Mark Price)
  • Margin Ratio:

The Margin Ratio is a risk management parameter set by Bybit, representing the maximum leverage allowed for a contract.

  • The calculations outlined above form the core of Bybit's contract trading mechanism, enabling traders to engage in futures contracts with confidence while managing their risk effectively.

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The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!

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