How to calculate profit on Poloniex contracts

To calculate profit on Poloniex perpetual contracts, consider both realized profits and unrealized profits based on the entry and exit prices, as well as margin funding fees and the contract size.

Dec 03, 2024 at 07:58 am

How to Calculate Profit on Poloniex Contracts

Leveraged trading, also known as margin trading, is available on Poloniex. It enables traders to enter positions with a higher potential return, but it is also accompanied by increased risk. Understanding how to calculate profits on Poloniex contracts is crucial for effective trading.

Calculating Profit on Poloniex Contracts

Calculating profit on Poloniex perpetual contracts involves several steps. It's important to consider both realized profits (profits that have been locked in) and unrealized profits (potential profits based on current market conditions).

Steps to Calculate Realized Profit:

1. Determine the Margin Funding Fee: This fee is charged to maintain leveraged trades. It can be found on the specific contract page under "Funding Fee." The funding fee is recalculated every 8 hours.
2. Calculate the Initial Margin: This is the amount of capital required to open a contract position. It is expressed as a percentage of the contract value. For example, if the initial margin is 1%, and the contract value is $100,000, the initial margin would be $1,000.
3. Determine the Exit Price: This is the price at which the contract position is closed.
4. Calculate the Profit: The profit (or loss) is calculated as follows:

Profit = [(Exit Price - Entry Price) * Contract Size] - Margin Funding Fees

Calculating Unrealized Profit:

1. Determine the Mark Price: This is the reference price used for calculating unrealized profit. It is typically the weighted average price of recent trades.
2. Calculate the Unrealized Profit: This is based on the current market conditions and the difference between the mark price and the entry price.

Profit = [(Mark Price - Entry Price) * Contract Size]

Example:

Let's say you enter a long BTC contract with a leverage of 10x. The entry price is $50,000, the contract size is 0.1 BTC, and the margin funding fee is 0.02%.

1. After 24 hours, the BTC price rises to $51,000.

• Realized Profit: (51,000 - 50,000) * 0.1 - 0.02% = $10

2. Without closing the position, the BTC price drops to $48,000.

• Unrealized Profit: (48,000 - 50,000) * 0.1 = -$20