How do newbies need to calculate the margin, profit and loss and liquidation price of perpetual contracts (including formulas)

Newbies can first calculate the margin, profit and loss, and liquidation price in perpetual contracts to manage risks. The margin formula is contract value/leverage multiple; the profit and loss formula is (closing price - opening price) contract value/leverage multiple; the liquidation price formula is opening price (1+(100%/leverage multiple).

Beginner’s Guide: Calculate the margin, profit and loss and liquidation price of perpetual contracts

Introduction

Perpetual contracts are a common derivative in the cryptocurrency market. Its leverage ratio is high, and newbies need to fully Understand and calculate its associated risks. This article will introduce how novices calculate the margin, profit and loss, and liquidation price of perpetual contracts.

Margin calculation

Margin is the amount of money that traders deposit into the exchange to open a position. The formula is:

保证金 = 合约价值 / 杠杆倍数

Example:

Suppose the trader wants to open a BTC perpetual contract with 10x leverage, and the current BTC price is $30,000. Then the margin calculation is as follows:

保证金 = 30,000 美元 * 1 / 10 = 3,000 美元

Profit and loss calculation

P&L is the trader's profit or loss when closing the position. The calculation formula is:

盈亏 = (平仓价 - 开仓价) * 合约价值 / 杠杆倍数

Example:

Suppose the trader opens a 10x leveraged BTC perpetual contract at a price of $30,000, and The position is closed at a price of $32,000. Then the profit and loss is calculated as follows:

盈亏 = (32,000 美元 - 30,000 美元) * 30,000 美元 / 10 = 6,000 美元

The liquidation price calculation

The liquidation price is the contract price at which the trader’s margin is liquidated. The calculation formula is:

爆仓价 = 开仓价 * (1 + (100% / 杠杆倍数))

Example:

For the above-mentioned 10x leveraged BTC perpetual contract with an opening price of $30,000, the liquidation price is calculated as follows:

爆仓价 = 30,000 美元 * (1 + (100% / 10)) = 33,000 美元

If the BTC price falls below $33,000, the trader’s position will be liquidated

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