Core Formulas for Calculating P&L of USDT Perpetual Contracts on Bybit Exchange
On the Bybit exchange, USDT perpetual contracts belong to linear perpetual contracts, where all margins, P&L settlements, and fees are denominated in USDT. The core of calculating P&L lies in clarifying the relationship between the entry price, contract quantity, and the movement between the exit price or the latest market price.
Calculation Method for Unrealized P&L
Unrealized P&L refers to the floating profit or loss generated by market price fluctuations during the holding period. Depending on the position direction, its calculation formula is:
- Long Position: Unrealized P&L = Contract Quantity × (Latest Market Price or Mark Price - Average Entry Price)
- Short Position: Unrealized P&L = Contract Quantity × (Average Entry Price - Latest Market Price or Mark Price)
In real-time market displays, Unrealized P&L is typically calculated and displayed based on the Last Traded Price (LTP), whereas risk control and liquidation triggers are strictly determined based on the Mark Price.
Determination of Average Entry Price and Realized P&L
If a trader opens positions in batches or adds to their position, the average entry price of the holding will change. The formula for calculating the average entry price is: the total contract value calculated in USDT divided by the total contract quantity, where the total value equals the sum of the products of each entry quantity and its corresponding price.
When an investor chooses to close a position, the unrealized P&L is converted into Realized P&L, representing the actual profit or loss amount incurred. It should be noted that the realized P&L settled upon closing a position typically deducts or includes trading fees and funding fees generated throughout the entire holding period.
The Impact Mechanism of Leverage on P&L
Leverage itself does not directly amplify or reduce the absolute profit or loss amount brought about by price movements. Absolute P&L is determined solely by the position size (contract quantity) and the magnitude of the price movement. However, leverage significantly affects the initial margin scale required to open a position, thereby altering the Return on Investment (ROI %) based on margin. High leverage means that even a small adverse price movement can trigger insufficient margin, thereby introducing liquidation risk.
