Margins & PNL Calculations
#Basic
#Futures
#Beginners
#Basic Concepts
MEXC offers two types of futures trading: USDT-M futures (forward contracts) and Coin-M futures (inverse contracts). While their calculation principles are similar, there are some differences. Below, this article will provide specific examples and explanations. Please note: the following calculations eschew extremely complex logic in favor of clarity and brevity for margin calculation.
1. Introduction to Margin
In MEXC perpetual futures, a certain amount of margin is required for opening a position. In the process of margin trading, it is crucial to pay attention to the following points:
1.1 Initial Margin
The minimum amount of margin required to open a position. Additionally, the initial margin rate (position value / position margin) also reflects your leverage multiplier.
1.2 Maintenance Margin
The minimum margin requirement to maintain a position. Falling below this ratio will trigger liquidation or partial liquidation.
1.3 Opening Cost
The total assets that must be frozen in order to open a position, including the initial margin and possible trading fees.
2. Margin Calculation
In perpetual futures, margin refers to the order cost required to open a position. The actual trading fee or rebate is ultimately determined by the manner in which the order (type) is executed. (A maker is a liquidity provider, while a taker is a liquidity consumer.)
2.1 USDT-M Futures
Margin Amount = Average Entry Price x Opening Quantity x Futures Size / Leverage Multiplier
2.2 Coin-M Futures
Margin Amount = Opening Quantity x Futures Size / (Leverage Multiplier x Average Entry Price)
2.3 Calculation Example
- USDT-M Futures:
If you use 200x leverage and submit a limit order for 10,000 BTC/USDT contracts at a price of 50,000 USDT/BTC, and the futures size is 0.0001 BTC per contract:
Your margin amount = (10,000 contracts x 0.0001 BTC/contract x 50,000 USDT/BTC) / 200x leverage = 250 USDT
- Coin-M Futures:
If you use 125x leverage and submit a limit order for 100 BTC/USD contracts at a price of 50,000 USD/BTC, and the futures size is 100 USD per contract:
Your margin amount = 100 contracts x 100 USD / (50,000 USD/BTC x 125x leverage) = 0.0016 BTC
3. PNL Calculation
Your profit and loss (PNL) are influenced by three factors: trading fees, funding fees (income or expenditure), and PNL from closing positions.
3.1 Trading Fees
- As a liquidity consumer or taker, you will incur a fee calculated as Position Value x Taker Fee Rate.
- As a liquidity provider or maker, you will incur a fee calculated as Position Value x Maker Fee Rate.
3.2 Funding Fee
- Depending on the funding rate (positive or negative) and the direction (long or short) of your position, you will either receive or incur funding fees.
- Funding Fee = Funding Rate x Position Value.
- Position Value = Position Quantity (Tokens) x Fair Price.
3.3 PNL Calculation
3.3.1 Closing PNL
- USDT-M Futures:
For long positions: (Close Price - Average Entry Price) x Position Quantity x Size
For short positions: (Average Entry Price - Close Price) x Position Quantity x Size
- Coin-M Futures:
For long positions: (1 / Average Entry Price - 1 / Average Close Price) x Position Quantity x Size
For short positions: (1 / Average Close Price - 1 / Average Entry Price) x Position Quantity x Size
3.3.2 Unrealized PNL
- USDT-M Futures:
For long positions: (Fair Price - Average Entry Price) x Position Quantity x Size
For short positions: (Average Entry Price - Fair Price) x Position Quantity x Size
- Coin-M Futures:
For long positions: (1 / Average Entry Price - 1 / Fair Price) x Position Quantity x Size
For short positions: (1 / Fair Price - 1 / Average Entry Price) x Position Quantity x Size
3.4 Calculation Example
Using USDT-M Futures as an Example:
If you, as a taker, open a long position of 10,000 contracts in the BTC/USDT perpetual futures at a price of 50,000 USDT/BTC:
- With Taker Fee Rate = 0.02%, Maker Fee Rate = 0.00%, Funding Rate = -0.025%, and the current market price = 50,000 USDT/BTC, you will incur a trading fee calculated as follows:
50,000 USDT/BTC x 10,000 contracts x 0.0001 BTC/contract x 0.05% = 10 USDT
- When the funding rate is negative, you will receive a funding fee calculated as follows:
50,000 USDT/BTC x 10,000 contracts x 0.0001 BTC/contract x (-0.025%) = -12.5 USDT (the funding fee to be received)
Suppose you, as a maker, close 10,000 contracts at a price of 60,000 USDT/BTC:
- Closing PNL = (60,000 USDT/BTC - 50,000 USDT/BTC) x 10,000 contracts x 0.0001 BTC/contract = 10,000 USDT
- Closing Fee = 60,000 USDT/BTC x 10,000 contracts x 0.0001 BTC/contract x 0.01% = 0 USDT
- So, in this scenario, your total realized PNL is calculated as follows:
= Closing PNL - Funding Fee - Taker Fee - Maker Fee
= 10,000 USDT -（- 12.5 USDT）- 10 USDT - 0 USDT
= 10,002.5 USDT
3.5 Reminders
- When settling the funding rate, the position value is calculated based on the current fair price.
- The calculation results are for reference only, and specific situations should be based on the rules of MEXC futures products.
- Tutorials and guides may vary across different operating systems. Please refer to your actual operating system for accurate information.
4. Summary
In MEXC perpetual futures, a certain amount of margin is required for opening a position. The initial margin represents the minimum amount required to open a position, reflecting your leverage multiplier. The maintenance margin is the minimum requirement to keep a position, falling below which may lead to forced liquidation. The opening cost includes the initial margin and potential trading fees. The calculation of the order cost varies based on different types of futures and prices. PNL is influenced by trading fees, funding fees, and closing PNL. Liquidity consumers, or takers, pay fees equal to the position value multiplied by the taker fee rate. Liquidity providers, or makers, pay fees equal to the position value multiplied by the maker fee rate. Depending on the funding rate and position direction, you will receive or pay funding fees, with the amount equal to the funding rate multiplied by the position value.