You didn't misread the account's profit and loss; you just mistakenly trusted the game rules behind the Perptual Futures.

Perpetual contract profit and loss calculations are far more complicated than they seem. This article delves into the mechanisms of marker prices, funding rates, forced liquidation, etc., revealing that traders may appear to be profitable, but in fact may be at high risk, as well as the liquidation traps hidden behind floating losses. (Synopsis: Ten bets and ten losses? Deconstructing the risk of perpetual contracts and the “undefeated” way of exchanges) (Background added: When smart contracts replace ETF funds? The rise and worry of tokenized stocks The profit and loss algorithm of perpetual contracts is never as simple as it seems on the exchange interface. It involves a multivariate game: funding rates, marked prices, forced liquidation mechanisms, and unrealized profit and loss display logic. Users may think they are “profitable”, but they may actually be in a high-risk area. And what you think of as a “small floating loss” is just that the liquidation model has been activated, but has not yet been executed. We try to analyze the calculation principle and psychological impact of floating profit and loss, trying to clarify: what is the real basis for determining profit and loss, and where are the pitfalls of the algorithm? Reading Guide If you have any of the following questions, it is recommended to start reading from the first chapter; Did you know that perpetual contracts are divided into forward and inverse contracts? If you have any of the following questions, it is recommended to start reading from Chapter 2: Why does my position appear to be profitable, but after closing it, the profit is not as much as shown in the frontend? Even lost money after adding fees and funding fees? When I open a position, the margin is enough to support a 10% fluctuation. But three days later, a 5% fluctuation blew me out? If you do not have the above questions, please like and forward this article before leaving. Chapter 1: Profit and Loss Calculator Perpetual contracts are the most popular tool in the crypto derivatives market, allowing traders to speculate on asset prices without an expiration date. Understanding how profit and loss (PnL) is calculated is the cornerstone of successful trading. The profit and loss calculation logic varies depending on the contract type, and is mainly divided into two categories: U-standard (forward contracts) and coin standard (reverse contracts). 1.1 U-standard (forward) contracts: Standard linear model U-standard contracts, also known as forward contracts, use stablecoins such as USDT or USDC as the margin and settlement currency. Its intuitive and linear way of calculating profit and loss makes it the mainstream choice today. Currently, most major exchanges, such as Binance and Bybit, mainly offer U-standard contracts. Its intuitive P&L structure and easy to automate money management make it a popular choice for retail and institutional investors. 1.1.1 Unrealised P&L (Unrealized PnL) Unrealised P&L refers to the floating P&L during the holding period and is the core indicator used by the exchange to assess the risk of forced liquidation. Key Element – Marked Price: Unrealised P&L is calculated based on the Mark Price, not the latest transaction price. A marker price is a composite index designed to reflect the “true” fair value of an asset, smoothing short-term price fluctuations and preventing market manipulation. It is usually composed of the index price (a weighted average of the prices of the major spot exchanges) and the funding rate basis to prevent unnecessary forced liquidation due to price fluctuations on a single exchange. Calculation formula: Long position unrealised P&L = ( marked price – Average open price ) × Number of open positions Unrealized P&L for short positions = ( average open price – marked price ) × Number of Positions Note: The unrealised P&L displayed in the trading panel is usually different from when the actual position is closed. This is due to the discrepancy between the strike price (the last traded price) and the marked price used for risk calculation. This difference can create a “psychological gap”. 1.1.2 Realized P&L (Realized PnL) Realized P&L is the final locked P&L after the position is closed. It contains all costs incurred during the transaction. Calculation formula: realized profit and loss = ( closing price – average opening price ) × number of closed positions – transaction fee – cost of funds incurred during the holding of the position Key variable – Notional value (Notional Value): A core pitfall for traders is confusing margin and notional value. The notional value of the contract is the total value of the position and is calculated as price x quantity. Trading fees and funding fees are calculated based on the notional value of the position, not the amount of margin. For example, a trader opens a long position with 100x leverage using $100 margin and controls a position with a notional value of $10,000. If the take order (Taker) commission is 0.06%, then the trader’s opening fee is not 0.06% of the margin ( i.e. $0.06 ) but 0.06% of the notional value, i.e. $10,000 * 0.0006 = $6. Similarly, the funding rate of 0.01% is not $0.01, but $10,000 * 0.0001 = $1. This shows that high leverage can greatly amplify the erosion of traders’ real margin by various fees. Even in a flat market, this persistent “chronic blood loss” significantly increases the risk of forced liquidation. 1.2 Coin-based (inverse) contracts: non-linear return structures Coin-based contracts, also known as inverse contracts, use the cryptocurrency being traded, such as BTC or ETH, as the margin and settlement currency. The profit and loss calculation for this type of contract is non-linear because the value of the margin itself fluctuates with the market price. P&L calculation: The P&L formula is based on the number of contracts (usually denominated in US dollars, such as $1 or $100 per contract) and the inverse of the price. This structure is also known as a “nonlinear inverse contract”. Calculation formula: Long position profit and loss ( in currency ) = ( closing price – opening price ) * Number of positions – commission Short position profit and loss ( in currency ) = ( Opening Price – Close Price )* Number of Positions – Commission Asymmetric Risk Analysis: This non-linear reward structure creates asymmetric risk exposure for traders, a critical but often overlooked pitfall. When traders go long on BTC/USD inverse contracts, as the price of BTC rises, their profits denominated in BTC become more valuable when converted to US dollars, creating a convex, accelerated profit curve. Conversely, when the price of BTC falls, while losses denominated in BTC increase in volume, BTC itself, which is used as margin, also depreciates. This double effect means that for long positions, a 10% drop in the market price will result in a loss of more than 10% in the value of the US dollar, triggering a forced liquidation faster than a linear contract. For short positions, the opposite is true: a 10% price increase results in a USD loss of less than 10%, making the risk of forced liquidation relatively low. This inherent convexity is a major risk for long traders in bear markets, but it is also a structural advantage for long-term holders in bull markets to accumulate underlying assets. That’s why it’s also known as a “hoarding” contract. Chapter 2: Visible Profits, Invisible Losses - The Hidden Risks of Perpetual Contracts We will take common positive contracts as an example. In addition to basic profit and loss calculations, perpetual contract trading involves many hidden costs and risks, which are the main reasons for unexpected losses for traders. …