Gate.io Education | How to Calculate Contract Profit and Loss?

The perpetual contracts provided by Gate.io are a type of financial derivative suitable for virtual currencies. Users can choose to trade long or short positions in crypto assets based on market trends to achieve profits. If users anticipate that market prices will rise, they can choose to go long (buy); if they expect prices to fall, they can go short (sell). The calculation of profit and loss varies according to the type of contract, with Gate.io currently supporting two types of perpetual contracts: U-based perpetual contracts (forward contracts) and BTC-based perpetual contracts (inverse contracts).

Unrealized Profit and Loss

Unrealized profit and loss refer to the gains or losses generated from the current held position from the last settlement (daily at 8:00, 16:00, and 24:00 UTC+8) to the current moment, also known as floating profit and loss. This is estimated based on the chosen pricing benchmark (mark price or latest transaction price).
Please note that unrealized profit and loss is merely an estimated value and does not affect the final profit and loss of the contract.

Realized Profit and Loss

Realized profit and loss include funding costs, trading fees, and the profit and loss settlement from reducing or closing positions. In general, realized profit and loss refer to the actual gains or losses that occur after users close their positions. When users reduce their position or fully close it, the platform will settle realized profit and loss based on the closing value and opening value.

Forward Contracts

• Settlement Profit and Loss (Long Position) = Position Size * (Current Settlement Price - Previous Settlement Price)
• Settlement Profit and Loss (Short Position) = Position Size * (Previous Settlement Price - Current Settlement Price)
• Trading Profit and Loss (Long Position) = Position Size * (Closing Price - Settlement Price)
• Trading Profit and Loss (Short Position) = Position Size * (Settlement Price - Closing Price)

Inverse Contracts

• Settlement Profit and Loss (Long Position) = Position Size Contract Value (1/Previous Settlement Price - 1/Current Settlement Price)
• Settlement Profit and Loss (Short Position) = Position Size Contract Value (1/Current Settlement Price - 1/Previous Settlement Price)
• Trading Profit and Loss (Long Position) = Contract Size Contract Value (1/Settlement Price - 1/Closing Price)
• Trading Profit and Loss (Short Position) = Contract Size Contract Value (1/Closing Price - 1/Settlement Price)

It is important to note that users holding long or short positions in contracts need to pay or receive funding fees every 8 hours. When these fees are settled, it results in realized profit and loss. Additionally, when users buy or sell in the contract market, they must pay certain fees, which also contributes to realized profit and loss.

Notes

1. Unrealized profit and loss are calculated using the current mark price as the closing price, while the actual profit and loss after closing are calculated using the actual closing price. Users can check the average transaction price in the “Position” section under “Order History.”
2. Profit and loss calculations do not include trading fees or funding costs; these fees can be viewed in the “Position” section under “Funding Flow,” and the three are calculated independently.
3. Realized profit and loss include trading fees, funding costs, and profit and loss from position reduction (calculated using the formulas above).
4. The final interpretation of this product is reserved by Gate.io.