How to Understand the PNL (Position Number) in Binance Futures?

Understanding PNL in Binance Futures

1. PNL, or Profit and Loss, is a critical metric for traders engaging in futures contracts on Binance. It reflects the financial outcome of open or closed positions based on price movements relative to the entry point. There are two primary types of PNL: realized and unrealized. Realized PNL refers to profits or losses locked in after closing a position, while unrealized PNL shows the current gain or loss of an open position that has not yet been settled.

2. In Binance Futures, PNL calculations depend on the contract type—either USDⓈ-M (USDT-margined) or COIN-M (coin-margined). For USDⓈ-M contracts, PNL is denominated in stablecoins like USDT, making it easier for traders to assess value without volatility from the base cryptocurrency. COIN-M contracts, however, express PNL in the underlying cryptocurrency, such as BTC or ETH, introducing additional exposure to price swings of the asset itself.

3. The platform displays PNL data directly on the futures trading interface. Traders can view both isolated and cross-margin modes, where margin allocation affects liquidation risks and leverage efficiency. Accurate interpretation of PNL helps users make informed decisions about when to exit trades, adjust stop-loss orders, or increase position sizes based on current performance.

Calculating Unrealized PNL

1. For long positions in USDⓈ-M futures, the formula for unrealized PNL is: (Mark Price – Entry Price) × Position Size. If the result is positive, the position is profitable; if negative, it indicates a loss. Mark price, not the last traded price, is used to prevent manipulation and ensure fair valuation during volatile market conditions.

2. Short positions reverse the calculation: (Entry Price – Mark Price) × Position Size. This distinction ensures that downward price movements benefit short sellers. Binance updates mark prices frequently using funding rate mechanisms and index prices tied to major exchanges to maintain accuracy.

3. In COIN-M contracts, the calculation includes the contract’s multiplier, often expressed in dollars per unit of cryptocurrency. The PNL is then converted into the base coin. For example, a BTCUSD contract might have a multiplier of $1, meaning each contract represents $1 worth of BTC. Gains or losses are settled in BTC, adding complexity due to fluctuating BTC value.

4. Leverage amplifies both gains and losses. A 10x leveraged position will see PNL changes ten times greater than the underlying price move. While this increases profit potential, it also raises the risk of liquidation, especially in highly volatile markets where price gaps occur rapidly.

Realized PNL and Fee Impact

1. Realized PNL becomes active once a position is fully or partially closed. Binance calculates it by taking the difference between the average exit price and the average entry price, multiplied by the quantity traded. This value is then adjusted for transaction fees, funding payments, and any applicable insurance fund deductions.

2. Trading fees, whether maker or taker, are subtracted from realized PNL. Maker fees apply to limit orders that add liquidity, usually lower than taker fees, which apply to market orders removing liquidity. Frequent trading can significantly erode net profits due to cumulative fee costs, especially in high-leverage scalping strategies.

3. Funding rates play a crucial role in perpetual futures PNL. Every eight hours, traders either pay or receive funding based on the premium between the contract price and the underlying index. Longs typically pay shorts when the market is in contango (premium), and vice versa in backwardation. Over time, these periodic transfers accumulate and impact overall profitability.

4. Partial closures require weighted averaging. If a trader opens multiple entries at different prices, Binance uses FIFO (First In, First Out) logic to determine which portion of the position is being closed. This affects the accuracy of PNL attribution and must be monitored closely in complex trade setups.

Common Questions About PNL in Binance Futures

A: Binance applies FIFO (First In, First Out) methodology. When a partial closure occurs, the earliest opened portion of the position is considered closed first. The realized PNL is computed using the entry price of that specific segment, the exit price, and the quantity closed. This method ensures consistency across user accounts.

Q: Why is my unrealized PNL negative even though the market moved slightly in my favor?

A: This can happen due to funding rate deductions or fee accruals. Even if the price moves positively, short-term fluctuations may not offset the cost of holding a position through a funding interval. Additionally, slippage or spread costs can influence mark price behavior, leading to temporary discrepancies.

Q: Can I switch between USDⓈ-M and COIN-M contracts for the same asset?

A: Yes, Binance offers both contract types for various cryptocurrencies. However, they operate independently. Transferring funds between them requires manual movement via the wallet section. Each has distinct PNL calculation methods and risk profiles, so traders should understand the implications before switching.

Q: Does Binance include funding payments in realized PNL?

A: Yes, all funding payments made or received during the life of a position are factored into the final realized PNL upon closure. These are recorded separately in the transaction history but contribute to the net profit or loss reflected in the account balance.