How to Calculate Tournaments PnL and PnL%
Tournaments on crypto trading platforms offer exciting opportunities to win prizes based on your trading performance. But how do they measure that performance? This article dives into the world of PnL (Profit and Loss) and PnL% in the context of trading competitions, using perpetual contracts as an example.
Understanding PnL and PnL%
- PnL (Profit and Loss): This represents the difference between your starting and ending account balance during a specific period. A positive PnL indicates a profit, while a negative PnL indicates a loss.
- PnL% (Profit and Loss Percentage): This expresses your PnL as a percentage of your starting account balance. It provides a standardized way to compare performance across different account sizes.
Calculating PnL and PnL% in Tournaments
Many tournaments calculate PnL and PnL% every 10 minutes. Here's a breakdown of how it works:
Total PnL:
This represents your overall profit or loss throughout the entire competition period. It's calculated as:
Total PnL = BalanceIntervalN - BalanceInterval0 - NetDepositAmount
- BalanceIntervalN: Your account balance at a specific interval (N) during the competition.
- BalanceInterval0: Your account balance at the beginning of the competition (interval 0).
- NetDepositAmount: The total deposits minus total withdrawals during the entire competition period.
Total PnL%:
This represents your overall performance as a percentage of your starting account balance. It's calculated using a compound formula that considers your PnL in each interval:
Total PnL% = (1 + PnLInterval1%) x (1 + PnLInterval2%) ... x (1 + PnLIntervalN%) - 1
- PnLIntervalN%: Your PnL percentage for a specific interval (N).
Calculating PnL% per Interval:
PnL% for each interval is calculated based on your account balance fluctuations and deposits/withdrawals within that specific interval:
PnLIntervalN% = PnLIntervalN / (BalanceIntervalN_1 + DepositAmount)
- PnLIntervalN: Your PnL for the specific interval (N).
- BalanceIntervalN_1: Your account balance at the previous interval (N-1).
- DepositAmount: The total deposits during the specific interval (N).
Important Points:
- Deposits and withdrawals only affect your PnL% during their settlement interval. This means a deposit made in the middle of an interval won't be reflected in the PnL% for the previous interval.
- Tournaments might have minimum participation requirements, such as a minimum perpetual trading volume or account balance.
- For the PnL% leaderboard to accurately reflect your trading performance, we require a minimum account balance of a predefined amount after each settlement interval. If your balance drops below the amount due to an account transfer out, your PnL% calculation will be temporarily paused until your balance recovers again. If your balance drops below the amount for reasons other than a transfer out (e.g., trading losses), your PnL% calculation will not be paused.
Understanding these calculations can help you:
- Track your performance throughout the tournament.
- Compare your performance with other participants (depending on the leaderboard visibility).
- Develop strategies to maximize your PnL and PnL% within the competition rules.
Remember: Tournaments are a great way to test your skills and potentially win prizes, but always prioritize responsible trading practices and risk management.