# Margin and profit/loss calculations

Open position margin
Open position margin is the minimum collateral amount required to open a position in a leveraged trade. The leverage multiple used by the trader is inversely proportional to the opening margin required to open a position. The higher the leverage, the less margin is required to open a position.
The reverse contract calculates the margin for opening a position by using the contract quantity / order price / leverage. Assuming that 100 multiple leverage is used to trade a contract worth 100 BTC, the trader only needs to put 1 BTC into the starting margin (1/100).
Example:
Traders use 50x leverage to buy 12,000 BTCUSD contract at 8,000 USD.
Open position margin= contract quantity / open price / leverage
= 12,000 / 8,000 / 50
= 0.03 BTC
Average opening price
When an open position occurs, the average price of the open position is recalculated.
Example: Trader A now holds multiple positions of BTCUSD long position 1000, opening price of 5000 USD. An hour later, Trader A decides to open additional 2000 positions at 6,000 USD. So, here's the formula and calculation steps for the average opening price.
Average open price= contract total quantity / total value of BTC contract
Replace for numbers in the formulas:
Contract total quantity
= 1,000 + 2,000
= 3,000
The total value of the BTC contract
= (1000 / 5000) + (2000 / 6000)
= 0.53333334 BTC
Average opening price
= (3000 / 0.53333334 BTC)
= 5625.00 USD
Profit/loss
After opening a position, the position and its profit and loss can be seen in real time in the position area.
Depending on the direction of your trade, the formula for calculating profit and loss is slightly different.
For multiple positions
Example:
Trader B now holds 1,000 long position BTCUSD, opening price is 5000 USD. When the latest market price in the order table is shown as 5,500 USD, the unrealized profit and loss is displayed as 0.01819 BTC.
Unrealized profit/loss= Contract quantity x [(1/average open price) - (1/latest market price)]
= 1000 x [ (1 / 5000) - (1 / 5500)]
= 1,000 x 0.00001819 BTC
= 0.01819 BTC
For short positions
Example:
Trader C now holds 1,000 BTCUSD short positions, opening price is 5000 USD. When the latest market price in the order table is shown as 4,500 USD, the unrealized profit and loss is displayed as 0.02223 BTC.
Unrealized profit/loss= Contract quantity x [(1/latest market price) - (1/average open price)]
= 1000 x [ (1 / 4500) - (1 / 5000)]
= 1,000 x 0.00002223 BTC
= 0.02223 BTC
Note:
• 1.
a) Reverse contract, as a currency standard contract, where your profit or loss is liquidated in the traded currency, not in US dollars. The USD here is mainly used as a quotation mechanism just for the convenience of traders.