Understanding how to calculate returns in leveraged trading—whether long or short—is crucial yet often overlooked, even by seasoned traders. This guide breaks down the mechanics of profit calculation across two保证金 models: fiat-backed (USD margin) and crypto-backed (coin margin).
Core Concepts: Margin Types & Profit Formulas
1. Crypto-Backed Margin (Coin Margin)
Assumes collateral is held in cryptocurrency (e.g., BTC).
Short Position Formula (1x Leverage):
Profit % = (Entry Price − Current Price) / Current Price Example: Entered a short at $50,000/BTC; price drops to $40,000:
($50,000 − $40,000) / $40,000 = 25% profit.
Long Position Formula: Multiply the above by −1.
With Leverage (n×):
Profit % = −n × (Entry Price − Current Price) / Current Price 2. Fiat-Backed Margin (USD Margin)
Assumes collateral is held in fiat (e.g., USD).
Short Position Formula (1x Leverage):
Profit % = (Current Price − Entry Price) / Entry Price Example: Short at $50,000/BTC; price falls to $40,000:
($40,000 − $50,000) / $50,000 = −20% loss.
With Leverage (n×):
Profit % = −n × (Current Price − Entry Price) / Entry Price 👉 Master leveraged trading with real-world examples
Key Differences Summarized
| Metric | Crypto-Backed Margin | Fiat-Backed Margin |
|----------------------|--------------------------------|--------------------------------|
| Collateral | Cryptocurrency (e.g., BTC) | Fiat (e.g., USD) |
| Profit Base | Coin quantity change | Fiat value change |
| Short Formula | (Entry − Current) / Current | (Current − Entry) / Entry |
| Leverage Effect | Multiplies volatility impact | Amplifies fiat gains/losses |
Practical Implications
- Volatility Sensitivity: Crypto-backed margins exaggerate gains/losses when denominated in the collateral coin due to price swings.
- Tax Considerations: Fiat-backed profits may simplify tax reporting in USD terms.
- Risk Management: Leverage magnifies errors—always use stop-losses.
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FAQs
Q1: Which margin type is better for hedging?
A1: Crypto-backed margins align with hodling strategies; fiat-backed suits traders seeking USD-equivalent stability.
Q2: How does leverage impact liquidity needs?
A2: Higher leverage demands tighter collateral management to avoid liquidations during volatility.
Q3: Can formulas apply to altcoins?
A3: Yes, but monitor liquidity—thin markets may distort price feeds and executions.
Note: Verified against OKX and BitMEX calculators. Always backtest strategies before live deployment.
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