No. Leverage does not directly affect your profit and loss on BitMEX. Leverage determines the margin required to open a position – higher leverage means less margin. Your PNL is determined by position size, the price difference between entry and exit, trading fees, the contract multiplier, and funding payments. While leverage itself doesn't change your PNL, it enables larger position sizes, which can significantly impact your potential profits or losses.
How Does Leverage Relate to Margin, Not PNL?
Leverage determines the amount of margin needed to open and maintain a position. Higher leverage requires less margin, allowing you to open larger positions with less capital.
Two positions with identical sizes but different leverage levels produce the same PNL. The difference is the margin locked up. A 10x leveraged position and a 100x leveraged position of the same size will generate identical profit or loss on the same price movement. The 100x position simply requires less margin to open.
Whilst leverage does not change PNL directly, it enables larger position sizes with less capital. Larger positions amplify both potential profits and potential losses.
What Factors Actually Determine PNL on BitMEX?
Five factors determine your PNL on BitMEX:
- Position size: The number of contracts in the position.
- Price difference: The gap between your average entry price and your exit price.
- Trading fees: Taker fees (deducted) and maker rebates (added).
- Contract multiplier: Each contract type has a specific multiplier value.
- Funding payments: Applicable to perpetual contracts. You either pay or receive funding depending on your position direction and the funding rate.
How Is PNL Calculated on BitMEX?
The formulas for PNL calculation are:
- Unrealised PNL = Number of Contracts x Multiplier x (1/Average Entry Price - 1/Exit Price)
- Realised PNL = Unrealised PNL - Taker Fee + Maker Rebate -/+ Funding Payment
To understand further how Realised PNL is calculated, refer to the following resources: