Futures trading offers powerful opportunities for profit through leveraged positions, but it also involves multiple financial components that impact your net returns. To trade effectively, you need a clear understanding of how profit and loss (P&L), trading fees, and funding costs are calculated. This guide breaks down each element in detail—using real-world examples—to help you make informed decisions and optimize your trading strategy.
Whether you're trading U-margined contracts or coin-margined contracts, every trade’s outcome is shaped by three key factors:
- Trading fees paid when opening or closing positions
- Funding fees received or paid during holding periods
- Realized and unrealized profits or losses from price movements
Let’s explore each component step by step.
Trading Fees: Maker vs. Taker
Every futures transaction incurs a fee based on your role in the trade: maker or taker.
- A maker adds liquidity to the order book by placing a limit order that doesn’t execute immediately.
- A taker removes liquidity by executing against existing orders (market orders or immediate limit fills).
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Fee Structure Example:
- Taker Fee: 0.02% of position value
- Maker Fee: 0.00% (common on many platforms as an incentive)
Formula:
- Taker Cost = Position Value × 0.02%
- Maker Cost = Position Value × 0.00%
If you open a $5,000 BTC/USDT position as a taker, your fee is:
$5,000 × 0.02% = **$1.00**
But if you use a limit order and act as a maker, your entry cost is $0, giving you a small but meaningful edge over time.
Choosing the right order type isn’t just about timing—it directly affects profitability. Active traders should prioritize maker strategies where possible to reduce cumulative costs.
Funding Fees: Earnings or Expenses Based on Market Sentiment
Perpetual futures contracts include a mechanism called funding rates, which align the contract price with the underlying spot market. These rates are settled regularly—typically every 8 hours—and transfer payments between long and short position holders.
Key Rules:
- If funding rate > 0: Longs pay shorts
- If funding rate < 0: Shorts pay longs
This system discourages prolonged mispricing and rewards traders on the less crowded side of the market.
Funding Fee Formula:
Funding Payment = Funding Rate × Position Value
(Position Value = Number of Contracts × Contract Size × Mark Price at Settlement)
For example, with a funding rate of –0.025% and a $5,000 long position:
- You receive: $5,000 × (–0.025%) = **+$1.25**
That means bearish sentiment was strong—shorts were in demand—so longs compensated them.
Over time, consistently holding positions during negative funding periods can generate passive income for short-side traders.
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Profit and Loss Calculations
Your trading performance is measured through two types of P&L: unrealized (floating) and realized (after closing).
3.1 Unrealized P&L (Before Closing the Position)
This reflects current gains or losses based on live market prices.
U-Margined Contracts (e.g., BTC/USDT)
- Long Position: (Mark Price – Entry Price) × Quantity
- Short Position: (Entry Price – Mark Price) × Quantity
Coin-Margined Contracts (e.g., BTCUSD)
- Long Position: [(1 / Entry Price) – (1 / Mark Price)] × Quantity
- Short Position: [(1 / Mark Price) – (1 / Entry Price)] × Quantity
These formulas account for inverse pricing used in crypto-denominated contracts.
3.2 Realized P&L (After Closing the Position)
Once you exit a trade, profits become actualized.
U-Margined Contracts
- Long Close: (Exit Price – Entry Price) × Quantity
- Short Close: (Entry Price – Exit Price) × Quantity
Coin-Margined Contracts
- Long Close: [(1 / Entry Price) – (1 / Exit Price)] × Quantity
- Short Close: [(1 / Exit Price) – (1 / Entry Price)] × Quantity
Let’s apply this with a full example.
Practical Example: Full Trade Breakdown
A trader opens a long position on a BTC/USDT perpetual contract:
- Buys 0.1 BTC at **$50,000** each → Total position value: $5,000
- Uses 10x leverage, deposits $500 margin
- Enters as a taker → Fee rate: 0.02%
- Funding rate at settlement: –0.025%
- Later closes as a maker at $60,000
Step-by-Step Calculation:
- Opening Fee (Taker):
$5,000 × 0.02% = **$1.00** - Funding Fee Received (negative rate benefits longs):
$5,000 × (–0.025%) = **+$1.25** - Realized P&L from Price Move:
($60,000 – $50,000) × 0.1 = $1,000 - Closing Fee (Maker):
$6,000 × 0.1 = $6,000 position size × 0.00% = $0
Net Profit:
$1,000 (gain) – $1.00 (entry fee) + $1.25 (funding income) – $0 (exit fee) = $1,000.25
Even small advantages—like using maker orders and catching favorable funding—add up across repeated trades.
Frequently Asked Questions
Q: How often are funding fees charged?
A: On most platforms, including major exchanges, funding is settled every 8 hours—typically at 04:00 UTC, 12:00 UTC, and 20:00 UTC.
Q: Can I avoid paying funding fees?
A: Yes—by closing your position before the next funding timestamp. Alternatively, go long when funding is negative or short when it's positive to earn instead of pay.
Q: What’s the difference between mark price and last traded price?
A: The mark price prevents manipulation and is used for liquidation and P&L calculations; it's derived from spot indices and funding rates. The last traded price is simply the most recent execution price.
Q: Do I pay fees only when closing a trade?
A: No—you pay fees on both entry and exit. However, using limit orders (maker) can reduce or eliminate one side of the cost.
Q: Why is my P&L negative even if the price moved slightly in my favor?
A: Trading fees and funding payments may offset small gains. Always factor in all costs before judging a trade’s success.
Q: Where can I view my historical funding payments and fees?
A: Most exchanges provide detailed records under “Wallet History” or “Transaction Records,” showing every fee deduction and funding transfer.
Final Thoughts
Understanding how futures profits are calculated—including trading fees, funding costs, and directional P&L—is essential for sustainable trading success. Small differences in execution style (maker vs. taker), timing of entries/exits relative to funding clocks, and accurate P&L tracking all contribute to better decision-making.
Always review your trade history regularly to assess true performance beyond surface-level price moves.
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