Futures Trading

PnL Calculation

Last updated: 12/31/2025
When trading futures contracts, it is essential to understand how to calculate the profit and loss (PnL) and return on investment (ROI) of your positions. This article explains the PnL calculation formulas for USDT-margined contracts and coin-margined contracts, as well as how to calculate returns based on these results.

 

1. PnL Calculation for USDT-Margined Contracts

The PnL calculation for USDT-margined contracts differs slightly from that of coin-margined contracts. In USDT-margined contracts, profit and loss are calculated directly in USDT, without the need to convert using inverse pricing.

PnL Formula (Long & Short Positions)

Long Position PnL PnL = Face Value × Number of Contracts × Contract Multiplier × (Mark Price − Average Entry Price)

Example

Assume you open a long position in a USDT-margined contract with the following parameters:
  • Face value: 1 BTC
  • Contract multiplier: 10
  • Average entry price: 50,000 USDT
  • Current mark price: 51,000 USDT
  • Number of contracts: 1
PnL calculation:
PnL = 1 × 1 × 10 × (51,000 − 50,000)   = 10 × 1,000   = 10,000 USDT

 

2. PnL Calculation for Coin-Margined Contracts

For coin-margined contracts, the PnL calculation for long and short positions follows the same formula and is denominated in the underlying asset (e.g., BTC).

PnL Formula (Long & Short Positions)

PnL PnL = Face Value × Number of Contracts × Contract Multiplier × (1 / Mark Price − 1 / Average Entry Price)

Example

Assume you open a long position in a coin-margined contract with the following parameters:
  • Face value: 1 BTC
  • Contract multiplier: 1
  • Average entry price: 50,000 USDT
  • Current mark price: 51,000 USDT
  • Number of contracts: 10
PnL calculation:
PnL = 1 × 10 × (−1) × (1 / 51,000 − 1 / 50,000)   ≈ −10 × (0.00001961 − 0.00002)   ≈ 10 × 0.00000039   ≈ 0.0000039 BTC

 

2. Futures Return Calculation

The return of a futures position measures performance relative to the initial margin used to open the position.

Return Formula

Return = PnL / Initial Margin
Where:
  • PnL is calculated using the formulas above
  • Initial Margin is the margin required when opening the position

Example

If your initial margin is 1,000 USDT and the PnL from the USDT-margined example above is 10,000 USDT, then:
Return = 10,000 / 1,000 = 10, or 1,000%
This means your return is 1,000%.

 

4. How to Correctly Calculate and Apply Futures PnL

  • Long positions: A rise in the mark price results in profit, while a decline results in loss.
  • Short positions: A decline in the mark price results in profit, while a rise results in loss.
By continuously monitoring market price movements, traders can calculate real-time PnL and make timely trading decisions.

 

5. Important Notes

  • Liquidation Risk: Sharp market fluctuations may bring your position close to liquidation. Always monitor margin levels and market volatility, and adjust positions or add margin when necessary.
  • Different Contract Types: Fees, funding rates, and other parameters may vary across platforms and contract types (e.g., perpetual vs. delivery contracts), affecting final PnL and returns.
  • Leverage Effect: While leverage amplifies profits, it also magnifies losses. Use leverage with caution and manage risk carefully.