How to calculate the profit of MEXC contract

How to Calculate the Profit of MEXC Contract

The cryptocurrency market has seen a surge in the popularity of contracts, with MEXC being one of the leading platforms offering contract trading services. MEXC contracts allow traders to speculate on the future price of cryptocurrencies, with the potential to earn significant profits. However, understanding how to calculate profit is crucial for successful trading.

Steps to Calculate MEXC Contract Profit

1. Determine Contract Position

The first step is to determine whether you have a long or short position in the contract. A long position means you are betting on the price of the underlying asset to increase, while a short position means you are betting on the price to decrease.

2. Calculate Unrealized Profit/Loss

Unrealized profit/loss refers to the potential profit or loss you have made up until the current market price. It is calculated as the difference between the current market price and the entry price multiplied by the number of contracts you hold.

• For a long position:

  Unrealized Profit/Loss = (Current Price - Entry Price) Contract Size Number of Contracts

• For a short position:

  Unrealized Profit/Loss = (Entry Price - Current Price) Contract Size Number of Contracts

3. Calculate Realized Profit/Loss

Realized profit/loss represents the actual profit or loss you have earned by closing the contract. It is calculated as the difference between the closing price and the entry price multiplied by the number of contracts you closed.

• For a long position:

  Realized Profit/Loss = (Closing Price - Entry Price) Contract Size Number of Contracts Closed

• For a short position:

  Realized Profit/Loss = (Entry Price - Closing Price) Contract Size Number of Contracts Closed

4. Example

Let's say you enter a long position on a MEXC BTCUSDT contract at an entry price of $20,000 with 5 contracts (each contract representing 10 USDT).

• Scenario 1: Price increases to $21,000

  Unrealized Profit = ($21,000 - $20,000) 10 5 = $500

• Scenario 2: Price decreases to $19,000

  Unrealized Loss = ($20,000 - $19,000) 10 5 = $500

• Scenario 3: Close the position at $21,000

  Realized Profit = ($21,000 - $20,000) 10 5 = $500

Additional Considerations

• Funding Fees: MEXC contracts incur funding fees, which are paid by the trader who holds a position opposite to the majority of market sentiment.
• Margin Requirement: Contract trading requires margin, which is a certain amount of funds held as collateral.
• Leverage: Leverage allows traders to amplify their potential profits, but it also increases the risk.