Navigating the world of cryptocurrency trading requires more than just market intuition—it demands a clear understanding of how profits and losses are calculated. Whether you're new to trading or looking to refine your strategy, mastering the mechanics behind USDT perpetual contracts is essential for making informed decisions. This guide breaks down key concepts such as average entry price, unrealized and realized P&L, and how fees impact your returns—all while keeping risk management in focus.
By the end of this article, you'll have a comprehensive grasp of how your positions evolve from open to closed, and how various factors influence your final profit or loss.
Average Entry Price
One of the foundational elements in calculating profit and loss is determining your average entry price, especially when adding to an existing position at different price points.
Unlike simple arithmetic averages, the correct method accounts for both volume and price. In platforms like Bybit, every time you add to a position, your average entry adjusts accordingly.
Formula:
Average Entry Price = Total Contract Value (in USDT) / Total Contract Quantity
Let’s illustrate with an example:
- Trader A holds 0.5 BTC long at $5,000
- Later adds 0.3 BTC long at $6,000
Step 1: Calculate total contract value
(0.5 × 5,000) + (0.3 × 6,000) = 2,500 + 1,800 = 4,300 USDTStep 2: Total quantity
0.5 + 0.3 = 0.8 BTCStep 3: Compute average entry
4,300 / 0.8 = $5,375👉 Discover how precise entry tracking can boost your trading accuracy
This updated average becomes the baseline for all future P&L calculations until further adjustments.
Unrealized Profit and Loss (P&L)
Unrealized P&L reflects the current gain or loss on an open position based on real-time market prices. It fluctuates constantly and gives traders immediate feedback on performance.
The calculation differs slightly depending on whether the position is long or short.
For Long Positions
Unrealized P&L = Contract Quantity × (Latest Market Price – Entry Price)
Example:
- Trader B holds 0.2 BTC long at $7,000
- Current market price: $7,500
0.2 × (7,500 – 7,000) = 0.2 × 500 = $100 USDT profitFor Short Positions
Unrealized P&L = Contract Quantity × (Entry Price – Latest Market Price)
Example:
- Trader C holds 0.4 BTC short at $6,000
- Current price: $5,000
0.4 × (6,000 – 5,000) = 0.4 × 1,000 = $400 USDT profitKey Notes:
- Settlement currency: USDT perpetual contracts settle gains/losses in USDT, unlike inverse contracts where profits are denominated in the base asset (e.g., BTC).
- Price movement impact: A $1,000 move affects a 1 BTC position by exactly $1,000—regardless of direction.
Leverage does not amplify P&L directly: Higher leverage reduces required margin but doesn’t change profit per price tick. What matters most are:
- Position size
- Price deviation from entry
- By default, unrealized P&L uses the latest market price. Hovering over it often reveals a version calculated using mark price, which prevents manipulation.
- Fees (trading and funding) are not included in unrealized P&L.
Unrealized P&L Percentage (%)
This metric shows your position’s return on investment (ROI) in percentage terms.
Unrealized P&L % = (Unrealized P&L / Position Margin) × 100%
Where:
- Position Margin = Initial Margin + Estimated Close Fee
Using Trader B again:
- Unrealized P&L: $100
- Leverage: 10x
- Initial Margin = (0.2 × 7,000) / 10 = $140
- Close fee estimate ≈ $0.693 (based on bankruptcy price × quantity × fee rate)
- Total margin ≈ $140.693
(100 / 140.693) × 100% ≈ 71.07%Important Insight:
Increasing leverage inflates the percentage return because it lowers margin—but actual dollar gains remain unchanged.
| Leverage | P&L | P&L % |
|---|---|---|
| 5x | $100 | ~35.62% |
| 10x | $100 | ~71.07% |
| 20x | $100 | ~141.45% |
👉 See how adjusting margin settings affects your ROI visibility
For cross-margin mode, margin is calculated using the maximum allowed leverage under the asset's risk limit (e.g., up to 100x for BTCUSD).
Realized P&L (Closed Positions)
When a trade is closed, unrealized gains become realized P&L, now inclusive of all associated costs.
| Factor | Unrealized P&L | Realized P&L |
|---|---|---|
| Position P&L | Included | Included |
| Trading Fees | Not included | Included |
| Funding Fees Paid | Not included | Included |
Realized P&L = Position P&L – Open Fee – Close Fee – Net Funding Fees
Example (Trader C):
- Shorted 0.4 BTC at $6,000
- Closed at $5,000 → P&L = $400
- Open fee: 0.4 × 6,000 × 0.055% = $1.32
- Close fee: 0.4 × 5,000 × 0.055% = $1.10
- Funding paid: $2.10
400 – 1.32 – 1.1 – 2.1 = $395.48 net profit✅ Applies only when the entire position is closed in one order.
For partial closes, fees are prorated based on the portion closed.
Closed P&L vs Realized P&L
While often used interchangeably, there’s a subtle distinction:
Closed P&L = Sum of realized position profits – Trading Fees – Funding Fees during holding period
It accumulates over time and updates dynamically as partial exits occur.
Example:
- Trader C closes only 0.3 BTC of a 0.4 BTC short at $5,000
- Profit: 0.3 × (6,000 – 5,000) = $300
- Pro-rated open fee: (based on full open cost × ratio)
- Close fee: 0.3 × 5,000 × 0.055% = $0.825
- Funding paid: $1.5
- Closed P&L: ~$296.355
Later opening a new short adds complexity—the system tracks cumulative realized results across related trades.
If an opposing order fully offsets the position (e.g., buying 0.3 BTC to close a 0.3 short), the platform recalculates and resets the closed P&L accordingly.
⚠️ Note: This feature was supported starting July 13, 2022—positions opened before this date may not reflect complete data.
Frequently Asked Questions
Q: Does increasing leverage increase my profit?
A: No—leverage affects margin requirements and liquidation risk, not dollar-based profit per price movement. Your profit depends on position size and price change.
Q: Why is my unrealized P&L different from what I expected?
A: Ensure you're using average entry price if you've added to the position. Also check if mark price or funding rate adjustments are influencing the display.
Q: Are funding fees included in unrealized P&L?
A: No—funding fees are only reflected once paid or received and appear in realized/closed P&L.
Q: How are fees calculated for partial closes?
A: Fees are distributed proportionally—both opening and funding costs are prorated based on the percentage of the position closed.
Q: What happens to closed P&L when I reverse a position?
A: The system recalculates based on offsetting trades and resets the realized value for the new directional exposure.
Q: Is closed P&L shown in real-time?
A: Yes—it updates after each partial close and includes all applicable fees and funding charges up to that point.
Core Keywords
- USDT perpetual contracts
- Unrealized P&L
- Realized profit and loss
- Average entry price
- Funding fees
- Trading fees
- Position margin
- Leverage impact
Understanding these metrics empowers traders to assess performance accurately and optimize strategies over time.
👉 Access advanced tools to monitor your real-time trading performance