# 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 ```