How to calculate CoinW contract profits

By understanding the steps involved in profit calculation for both perpetual and futures contracts on CoinW, traders can accurately determine their potential gains or losses before entering into a trade.

Nov 15, 2024 at 04:52 am

How to Calculate CoinW Contract Profits

When trading CoinW contracts, it's crucial to understand how to calculate your profits accurately. This guide will walk you through the steps involved in profit calculation for both perpetual and futures contracts on CoinW.

Step 1: Identify Contract Specifications

Before calculating profits, you need to gather essential information about the contract you're trading:

• Contract Size: This represents the value of one contract.
• Tick Value: Specifies the minimum price change for the contract. For example, if the tick value is $0.001, a price movement of $0.001 will result in a single tick.
• Leverage Multiplier: Indicates the amount of leverage you're applying to your trade.

Step 2: Calculate Contract Value

The contract value is the initial value of your position before any profit or loss. It's calculated as follows:

Contract Value = Contract Size x Entry Price x Leverage

For example, if you buy 10 perpetual contracts of BTC/USDT with a contract size of 0.0001 BTC and an entry price of $20,000, and you're using 5x leverage, your contract value would be:

Contract Value = 0.0001 BTC x $20,000 x 5 = $1

Step 3: Mark Your Position

Marking your position involves recording the current price of the contract. This is important because profits are realized when you close your position at a different price than your entry price.

Step 4: Calculate Unrealized P&L

Unrealized P&L is the profit or loss you would earn if you were to close your position at the current market price. It's calculated as follows:

Unrealized P&L = (Current Price - Entry Price) x Contract Size x Leverage

Continuing the example above, if the current price of BTC/USDT is $20,050, your unrealized P&L would be:

Unrealized P&L = ($20,050 - $20,000) x 0.0001 BTC x 5 = $0.025

Step 5: Calculate Realized P&L

Realized P&L is the actual profit or loss you have incurred when you close your position, i.e., when you exit the trade. It's calculated as follows:

Realized P&L = (Close Price - Entry Price) x Contract Size x Leverage

For instance, if you close your position at a price of $20,075, your realized P&L would be:

Realized P&L = ($20,075 - $20,000) x 0.0001 BTC x 5 = $0.0375

Step 6: Adjust for Fees and Funding

Your final profit or loss may be affected by trading fees, funding rate payments, or insurance premiums. These adjustments are typically factored into the realized P&L calculation by your trading platform.

Remember, the direction of your profit or loss depends on whether you enter a long or short position, as well as the subsequent price movement of the underlying asset.