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# Profit/Loss & Position Marking
## Profit/Loss
### Funding Payments
The funding rate is accrued continuously on the position size, and paid to/from the margin account in collateral currency at spot. Funding payments are realized when a trader modifies her position size, i.e. by performing an opening or closing trade.
### Opening Trades
Opening a position or increasing the size of an existing position:
```
Locked-in-Value += Index Price * Trade Amount
Cash in margin account += ((Execution Price - Index Price) * Trade Amount
- Fee rate * |Trade Amount| * Index Price) / Collateral spot price
- Accumulated funding since last trade
```
### Closing Trades
Closing or reducing the size of an existing position:
```
Locked-in-Value += Average Entry Price * Trade Amount
where
Average Entry Price = |Locked-in-Value| / |Position size|
Cash in margin account += ((Execution Price - Index Price) * Trade Amount
- Fee rate * |Trade Amount| * Index Price) / Collateral spot price
- Accumulated funding since last trade
```
## Position Marking
The mark price determines Margin Account calculations and Liquidations.
### Unrealized PnL
Current profit and loss of a given open position, in collateral currency:
```
Unrealized PnL = (Mark Price * Position Size - Locked-in-Value) / Collateral spot price
- Unpaid accumulated funding
```
### Margin Balance
Current value of margin account including unrealized PnL, in collateral currency:
```
Margin Balance = Cash in margin account + Unrealized PnL
```
### Leverage
Ratio between the position value at mark price in collateral currency and margin balance:
```
Leverage = (|Position size| * Mark Price / Collateral spot price) / Margin Balance
```
### Margin Rate
Inverse of position leverage:
```
Margin Rate = 1 / Leverage
```
---
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