Profit and loss calculation
Users can use the profit and loss displayed in the profit and loss calendar to grasp the profit and loss of the closing order on the day, excluding handling fees;
It is very important to understand how profit and loss are calculated before opening a position. Through this article, we will show you how variables such as average opening price, unrealized profit and loss, closing profit and loss, and realized profit and loss affect profit and loss calculation.
Average opening price
When trading contracts in KINE, the average opening price will change regardless of when the trader uses a new commission to increase the position.
For example: Trader A now holds a long position of ETHUSDT 1, and the opening price is 1560 USDT. One hour later, Trader A decides to open an additional position of 0.5, and the opening price is 1563 USDT.
The formula and calculation steps for the average opening price are as follows:
Average opening price = Total contract value calculated in USDT / Total number of contracts
Total contract value calculated in USDT = [(Contract quantity 1 ✖️Price 1) + (Contract quantity 2 ✖️Price 2)...]
Substitute the above data:
Total contract value calculated in USDT
= (Contract quantity 1 ✖️Price 1) + (Contract quantity 2 ✖️Price 2)
= (1 ✖️1560) + (0.5 ✖️1563)
= 2341.5
Total number of contracts
= 1 + 0.5
= 1.5 ETH
Average opening price
=2341.5 / 1.5
= 1561
Unrealized P&L
Once the order is executed, the position and its unrealized P&L can be seen in real time in the position area. The formula for calculating unrealized P&L is slightly different depending on your trading direction.
For example, for long positions:
Trader B now holds a long position of BTCUSDT 0.5, and the opening price is 27920 USD. When the latest market price in the order sheet is 27980 USD, the unrealized P&L will be displayed as 30 USDT.
Unrealized P&L = Number of contracts x (Latest market price - Opening price)
= 0.5 ✖️ (27980 - 27920)
= 30 USDT
For example, for short positions:
Trader C now holds a short position of BTCUSDT 0.5, and the opening price is 27200 USD. When the latest market price in the order sheet is 27090 USD, the unrealized P&L will be displayed as 55 USDT.
Unrealized P&L = Number of Contracts x (Opening Price - Latest Market Price)
= 0.5 x (27200 - 27090)
= 55 USDT
For example, for short positions:
Trader C now holds a short position of BTCUSDT 0.5, and the opening price is 27200 USD. When the latest market price in the order sheet is 27090 USD, the unrealized P&L will be displayed as 55 USDT.
Unrealized P&L = Number of Contracts x (Opening Price - Latest Market Price)
= 0.5 x (27200 - 27090)
= 55 USDT
It should be noted that
In USDT contracts (U-based), users' P&L is settled in USDT.
Price fluctuations (e.g. 1000 USTD), regardless of the direction, assuming the position size is 1 BTC, then this means that the trader has made or lost 1000 USD.
Increasing leverage does not directly multiply your P&L. Instead, P&L is determined by the position size and price fluctuations. In simple terms,
The higher the leverage, the lower the margin required to open a position
The larger the number of contracts, the greater the P&L.
The greater the distance between the price and the opening price, the greater the P&L.
The default displayed unrealized P&L is calculated based on the latest market price. Put the mouse on the displayed number, and the unrealized profit and loss will be displayed at the mark price.
The calculation of unrealized profit and loss does not include any transaction fees and funding fees paid or received by the trader during the process of opening/closing/holding positions.
3）Unrealized P&L Percentage (%)
The unrealized P&L percentage shows the return on investment (ROI) of the position in the form of a percentage. Just like the unrealized P&L, this number is constantly changing with the latest market price. Therefore, the formula for the unrealized P&L percentage is as follows:
Unrealized P&L Percentage (%) = [Position Unrealized P&L / Opening Margin] x 100%
For example, trader C now holds a short position of BTCUSDT 0.5, the opening price is 27200 USD, and the leverage used is 10. When the latest market price in the order book is 27090 USD, the unrealized P&L will be displayed as 55 USDT.
Based on our previous calculations, the position's unrealized profit and loss = 55 USDT
Opening margin = (Number of contracts x opening price) / leverage = (0.5 x 27200) / 10 = 1360 USDT
Unrealized profit and loss percentage (%) = (55 USDT / 1360 USDT) x 100% = 4.04%
Note: Some traders may have some misunderstandings here. Increasing leverage will not increase your unrealized profit. Some traders see that the unrealized profit and loss percentage has increased because the position margin used has decreased, not because the actual profit has increased. Taking trader C as an example, whether the leverage used is 10x, 5x, or 20x, the unrealized profit and loss is the same.
If the original leverage is 10 times, his unrealized profit and loss = 55 USDT, and the percentage of unrealized profit and loss = 4.04%
If the leverage is lowered to 5 times, his unrealized profit and loss = 55 USDT, and the percentage of unrealized profit and loss = 2.02%
If the leverage is increased to 20 times, his unrealized profit and loss = 55 USDT, and the percentage of unrealized profit and loss = 8.09%
4）Closing profit and loss
When the trader finally closes the position, the profit and loss are realized, and the user can find the [Realized Profit and Loss] of the order in [Contract History]-[Historical Order]. The realized profit and loss does not include the handling fee. Take trader C as an example, holding a short position of BTCUSDT 0.5, the opening price is 27200 USD, and the leverage used is 10. When the latest market price in the order table is displayed as 27000 USD, trader C decides to close the entire position through the market price closing strategy.
Based on our previous calculation, the profit and loss of closing position = (27200-27000) ✖️0.5 = 100 USDT
Note:
a) The above example only applies to the case where the entire position is opened and closed with a single order.
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