Margin and profit/loss calculations

Opening Margin

The opening margin includes the initial margin and the opening loss.

Opening losses occur when the futures contract price moves unfavourably (that is, the mark price is lower than the order price of the long order). Incorporating opening losses into the cost of opening a position can help prevent forced liquidation when traders place orders. If the opening loss is not included in the cost of opening a position, users' positions are likely to be liquidated immediately when they place an order.

Formulas

Initial Margin:

$$\text{Initial Margin} = \frac{\text{Notional Value}}{\text{Leverage}}$$

sCNH-margined Notional Value:

$$\text{Notional Value} = \text{Order Price} \times \text{Quantity}$$

Opening Loss (sCNH-margined):

$$\text{Opening Loss} = \text{Quantity} \times \left| \min\left[0, \text{Order Direction} \times (\text{Mark Price} - \text{Order Price})\right] \right|$$

Order Direction: 1 represents a long order; −1 represents a short order

Example

sCNH-margined contract. The price is 1.94 sCNH. Open long 10,000 GMYD/sCNH contracts. Leverage 10×. The mark price now is 1.90 sCNH.

Initial Margin:

$$\frac{1.94 \times 10{,}000}{10} = 1{,}940 \text{ sCNH}$$

Opening Loss:

$$10{,}000 \times \left| \min\left[0, 1 \times (1.90 - 1.94)\right] \right| = 10{,}000 \times 0.04 = 400 \text{ sCNH}$$

Opening Margin:

$$1{,}940 + 400 = 2{,}340 \text{ sCNH}$$

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Average Opening Price

When an open position occurs, the average price of the open position is recalculated.

Formula

Average Opening Price:

$$\text{Average Opening Price} = \frac{\text{Total Contract Value in sCNH}}{\text{Total Contract Quantity}}$$

Total Contract Value in sCNH:

$$\text{Total Value} = (\text{Quantity}_1 \times \text{Price}_1) + (\text{Quantity}_2 \times \text{Price}_2) + \ldots$$

Example

Trader A now holds a GMYD/sCNH long position of 5,000 GMYD, opening price of 1.90 sCNH. An hour later, Trader A decides to open an additional 3,000 GMYD position at 2.00 sCNH.

Total Contract Value:

$$(5{,}000 \times 1.90) + (3{,}000 \times 2.00) = 9{,}500 + 6{,}000 = 15{,}500 \text{ sCNH}$$

Total Contract Quantity:

$$5{,}000 + 3{,}000 = 8{,}000 \text{ GMYD}$$

Average Opening Price:

$$\frac{15{,}500}{8{,}000} = 1.9375 \text{ sCNH}$$

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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 Long Positions

Formula:

$$\text{Profit/Loss} = \text{Quantity} \times (\text{Mark Price} - \text{Average Opening Price})$$

Example

Trader B now holds a GMYD/sCNH long position of 5,000 GMYD, opening price of 1.90 sCNH. When the latest mark price is shown as 2.00 sCNH, the unrealized profit and loss is displayed as 500 sCNH.

$$5{,}000 \times (2.00 - 1.90) = 5{,}000 \times 0.10 = +500 \text{ sCNH}$$

For Short Positions

Formula:

$$\text{Profit/Loss} = \text{Quantity} \times (\text{Average Opening Price} - \text{Mark Price})$$

Example

Trader C now holds a GMYD/sCNH short position of 8,000 GMYD, opening price of 2.00 sCNH. When the latest mark price is shown as 1.85 sCNH, the unrealized profit and loss is displayed as 1,200 sCNH.

$$8{,}000 \times (2.00 - 1.85) = 8{,}000 \times 0.15 = +1{,}200 \text{ sCNH}$$

Summary of Formulas

Formula	Long Position	Short Position
Notional Value	Qty × Price	Qty × Price
Initial Margin	Notional ÷ Leverage	Notional ÷ Leverage
Opening Loss	Qty × max(0, Order Price − Mark Price)	Qty × max(0, Mark Price − Order Price)
Opening Margin	Initial Margin + Opening Loss	Initial Margin + Opening Loss
Unrealized PnL	Qty × (Mark Price − Entry Price)	Qty × (Entry Price − Mark Price)
Realized PnL	Qty × (Exit Price − Entry Price)	Qty × (Entry Price − Exit Price)