realized/unrealized PnL with leverage

External question — Quantitative Finance Stack Exchange Author: nimo23 Original post: https://quant.stackexchange.com/questions/53520 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Look at this trade: Sequence Side Quantity @ Price 1. Buy 10 @ 1,0 (with leverage of 50) 2. Sell 10 @ 1,2 (inherits the leverage of 50?) Imagine that this trade is a CFD or a forex with USDEUR. I use a leverage of 50 for buy. How should I include this leverage within my PnL calculations? Is this the right formula: PnL = quantity * (ExitPrice * exitLeverage - EntryPrice * entryLeverage) Question: Do I need to multiply the entry or exit prices by the leverage at all, or does the broker already returns the trades with the "leveraged prices"?

External answer — Quantitative Finance Stack Exchange Author: yudayuda Original post: https://quant.stackexchange.com/a/53531 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Yes, that is right. You could also do: Pnl = (Exit - Entry) * Leverage To save yourself multiplying by leverage twice. There are also costs associated with putting trades on/off so these should be taken into consideration.

External answer — Quantitative Finance Stack Exchange Author: AlRacoon Original post: https://quant.stackexchange.com/a/58105 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. PnL = Profit - Funding Costs PnL = (Exit - Entry) - (50 * Capital - Capital) * Funding Rate % Gain = PnL / Capital Capital is how much you are investing (inclusive of margin). Your funding costs is 49 * Capital as that is how much you are borrowing to get to 50x leverage.