TradingPerpetuals
PnL and Account Value
Understanding profit/loss calculations and account valuation
PnL and Account Value
Understanding how profit and loss is calculated is essential for managing positions effectively on MuchFi.
Key Concepts
| Term | Definition |
|---|---|
| Current Notional | Position size multiplied by the current mark price |
| Open Notional | The total cost you've paid to build your position |
| PnL | The difference between current position value and entry cost |
| Account Value | Combined total of assets plus PnL minus fees |
PnL Calculations
Long Positions
PnL = Current Notional - Open NotionalShort Positions
PnL = Open Notional - Current NotionalOpen Notional Adjustments
The open notional adjusts dynamically:
- Adding to position - Open notional increases by the quoted amount traded
- Reducing position - Open notional decreases proportionally based on remaining versus original size
Account Value Formula
Account value comprises four components:
Account Value = Deposited Margin + Total PnL + Net Funding - Cumulative FeesWhere:
- Deposited Margin - Collateral you've deposited
- Total PnL - Sum of PnL across all positions
- Net Funding - Funding payments received or owed
- Cumulative Fees - Trading fees paid to the protocol
Realized vs. Unrealized PnL
Unrealized PnL
Reflects gains or losses on open positions before closure:
- Fluctuates with mark price movements
- Can disappear if prices move unfavorably before position closes
- Represents potential profit or loss
Realized PnL
Represents locked-in gains or losses from closed positions:
- Gets added to your account when you close a position or reduce its size
- Once realized, is permanently added to your account balance
- Cannot change after realization