By doing contract trading, traders will gain two types of profit and loss (P&L): Unrealized Profit and Loss (UPL) & Realized Profit and Loss (RPL).
1. UPL
UPL refers to the profit and loss before closing the position. It is an estimation with Fair Marking Price which may change as the price fluctuates.
Positive Contracts
Longs UPL = Face Value & Position QTY * (Mark Price - Entry Price)
Shorts UPL = Face Value & Position QTY * (Entry Price - Mark Price)
Inverse Contracts
Longs UPL = Face Value & Position QTY * (1/Entry Price - 1/Mark Price)
Shorts UPL = Face Value & Position QTY *(1/Mark Price - 1/Entry Price)
2. RPL
RPL refers to the actual profit and loss after closing the position, which will be calculated based on the trader’s Entry Price and Closing Price.
Positive Contracts
Longs UPL = Face Value & Position QTY * (Closing Price - Entry Price)
Shorts UPL = Face Value & Position QTY * (Entry Price - Closing Price)
Inverse Contracts
Longs UPL = Face Value & Position QTY * (1/Entry Price - 1/Closing Price)
Shorts UPL = Face Value & Position QTY * (1/Closing Price - 1/Entry Price)
3. Example
Suppose Bob longs 10,000 BTC/USDT positive contracts at a price of $8,500. Now the Fair Mark Price of the contract is $9,000. Taking out the fees, then Bob’s UPL is
0.01BTC * 10,000 Contracts * ($9,000/BTC - $8,500/BTC) = 50,000 USDT
After an hour later, Bobs closed all his positions at a price of $9,100 USDT. Now his RPL would be
0.01BTC * 10,000 Contracts * ($9,100/BTC - $8,500/BTC) = 60,000 USDT