In a futures position, three different numbers coexist at the same time.
Notional — the full size of the exposure.
Margin — funds allocated to maintain the position.
PnL — profit or loss from price movement, taking into account the calculation rules.
Example: a position with a notional of 1,000 USDT with 5x leverage requires approximately 200 USDT of initial margin. A 1% move in the underlying asset results in about 10 USDT change in PnL before commissions and funding.
That’s only 1% of the notional, but already 5% of the initial margin.
So I would never assess risk based only on the amount that was deducted as margin. The market moves the entire notional of the position.
Notional — the full size of the exposure.
Margin — funds allocated to maintain the position.
PnL — profit or loss from price movement, taking into account the calculation rules.
Example: a position with a notional of 1,000 USDT with 5x leverage requires approximately 200 USDT of initial margin. A 1% move in the underlying asset results in about 10 USDT change in PnL before commissions and funding.
That’s only 1% of the notional, but already 5% of the initial margin.
So I would never assess risk based only on the amount that was deducted as margin. The market moves the entire notional of the position.