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Trading with high leverage on PrimeXBT can be very lucrative but for you to fully utilize its potential you need to know how to correctly calculate your potential/current profit/loss on one of the fastest growing leverage trading platforms – PrimeXBT.
Before starting to trade on PrimeXBT you need to know that the platform settles all profit and loss in Bitcoin even though you are buying/selling other assets.
Your account summary menu is comprised of:
- Balance – Funds deposited to your trading account excluding Unrealized Profit and Loss (FPL)
- Equity – Portfolio balance including Unrealized Profit and Loss
- Unrealized PnL – Floating Profit and Loss, the aggregated result (unrealized) of all your opened trading positions
- Used Margin – The amount of BTC currently used to cover the margin requirements of all opened positions
- Available Margin – The funds available for margin trading derived from subtracting used for margin requirements from Equity. Represented in BTC
- Available Margin % – Same as above but represented in % from the total balance. (Available Margin/Equity) * 100%
How to Calculate Profit?
Before placing your order you have the option to tick the box place Stop Loss and Take Profit, on that window you also will see projected Loss and Projected Profit in BTC but they can fluctuate. Let’s provide an example with a long position for ETH:
A long position on Ethereum (ETH) – for this example we will take a set price in the moment of the order execution of 250$ per 1 ETH. Our target for taking profit is 270$ per 1 ETH, the buy order execution accounts for 10 ETH which means that we entered the market with 2500$ position (keep in mind that this is 100:1 leverage, meaning you can enter with 25$ of your capital and trade with 2500$. You will need more capital to act as a buffer covering available margin if the trade goes in the wrong direction).
For this example, we will take this position as successful and the price reaches our target. So we take a profit of $200: 10 x ($270 – $250) = $200 or if you decided to buy 1 ETH for this long position instead of 10 ETH your profit would be 20$. The difference between the entry point and exit point (if the order was for 0.5 the profit would have been 10$: 270 – 250 = 20 x 0.5 = 10$.
Of course, let’s not forget that the platform has a fixed flat fee of 0.05% (for the different assets you trade there’s a different flat fee) which will be deducted from your profit.
Example with BTC:
If you place a short position for 1 BTC at a price of 8000$ per 1 BTC and your target is 7900$ your profit will be 100$ (8000 – 7900 = 100$ – the profit is calculated with the price difference in mind). When you deduct the fee of 0.05% from the trade you should end with a pure profit of around 96$.
Example with Ripple (XRP):
Buying a long position for XRP with a price of 0.40$ per 1 XRP. We want to buy 1000 XRP for this long position 1000 x 0.40 = 400$ a position entered with 4$ from your capital (as on PrimeXBT you trade always with 100x). Our target for this trade is 0.55$ per XRP with a Take Profit set on that price. The profit is: 0.55 – 0.40 = 0.15 x 1000 = 150$ profit.
What is Margin Overnight Financing?
When you consider holding a position for a longer period there is a daily flat fee charged for overnight financing. Which is only applied if you want to hold the position after GMT 12 PM. For day traders who close their positions before 12 PM, there is no overnight margin financing fee applied.
Margin financing of BTC/USD:
Financing Long: -$20.6 per 1 BTC
Financing Short: -$10.3 per 1 BTC
Margin financing of ETH/USD:
Financing Long: -$1.68 per 1 ETH
Financing Short: -$0.84 per 1 ETH
Margin financing of LTC/USD:
Financing Long: -$0.28 per 1 LTC
Financing Short: -$0.14 per 1 LTC
Margin financing of XRP/USD:
Financing Long: -$0.00196 per 1 XRP
Financing Short: -$0.00098 per 1 XRP
Margin financing of EOS/USD:
Financing Long: -$0.024 per 1 EOS
Financing Short: -$0.012 per 1 EOS
Opportunity and Risk
With 100x leverage you have the opportunity to make unreal profits if you manage your capital and positions correctly. It is recommended not to use more than 10% of your margin so you always have 90% available margin acting as if the market turns against you.
In any case – leverage trading, especially in crypto markets is considered a more advanced type of trading compared to the usual 1:1. You should be very cautious and have a solid understanding of how to trade in order to fully maximize your potential of the present volatility.
Traders need not only to calculate profit but also their potential loss. Mismanagement of calculating the potential loss can lead to an unwanted loss or even liquidation. When it comes to leverage trading with Perpetual Contracts, capital management, calculating Profit/Loss, exiting targets and using Stop Loss/Take Profit is crucial to having a successful trading activity.
Trading with leverage is considered risky and you risk losing all of your capital while trading!
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