How to calculate profit and loss using leverage?
Profits and losses are calculated based on the exposure of the purchased asset and will be compared against the margin used to open the position.
Example:
|
Day |
Current ABC Stock Price |
Total Shares |
Total Share Value |
Leverage |
Margin |
Position Value |
Unrealized Gain/Loss |
Profit Percentage |
|
1 |
$100 |
2 |
$200 |
2x |
$100 |
$200 |
$0 |
0% |
|
2 (if price goes up) |
$120 |
2 |
$240 |
2x |
$100 |
$240 |
$40 |
+40% |
|
2 (if the price drops) |
$80 |
2 |
$160 |
2x |
$100 |
$160 |
-$40 |
-40% |
Explanation:
You buy 2 shares of ABC at $100 each with 2x leverage, paying only $100 as margin. On the 2nd day, the stock price rises to $120 per share, making your position worth $240. With a margin of $100, you have an unrealized gain of $40 (+40%). If the stock price falls, your unrealized loss will also be $40.