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Floating Profit and Loss Calculation
Floating Profit and Loss Calculation
2021-09-01 07:12:52 UTC
116757 Lido
Why is the Floating Profit and Loss (PNL) negative when my entry price is lower than the current price?
To make it easier for you to understand Floating PNL, we would like to start off by introducing the following two formulas:
Floating PNL=(current price - average buying price)*coin holdings
Entry price: the price of the first filled order after the grid is created
We can see two key parameters in the Floating PNL formula, one is the "current price" — the current market price, and the other is the "average buying price". But what is the "average buying price"?
Let’s take the GT_USDT trading pair as an example:
Current price for GT_USDT when the grid is created: 30 USDT
Price range: 30-100 USDT
Common difference per grid: 10 USDT
When the grid is created:
Assume both the current price and the average buying price for GT_USDT are 30 USDT. According to the above formula, the Floating PNL is exactly 0 at this time.
When the grid bot has been running for a period of time:
If the price for GT_USDT goes up from 30 USDT to 100 USDT and then falls back to 40 USDT, the quantitative strategy will be utilized to complete the following operations during this period:
In the course of the price rising from 30 USDT to 100 USDT, the strategy will help you to make returns by executing the sell orders at 40 USDT, 50 USDT, 60 USDT, 70 USDT, 80 USDT, 90 USDT, and 100 USDT respectively, with a common difference of 10 USDT.
Afterwards, in the course of the price dropping from 100 USDT to 40 USDT, the strategy will help execute the buy orders at 90 USDT, 80 USDT, 70 USDT, 60 USDT, 50 USDT, and 40 USDT respectively, with a common difference of 10 USDT.
Therefore, in the course of the price going down, the strategy helps execute buy orders at six different price levels, according to which we can calculate that the average price of holdings is 65 USDT, which is higher than the current market price of 40 USDT. That is to say, the current market price minus the average price of holdings is negative. Naturally, the Floating PNL is negative.
Examples are described in the following table
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