Before we begin, please be aware that the USD you see on the platform serves mainly as a price quote and traders do not actually trade USD on Bybit. For more information, please click on the article below.

__Example__

1) Contracts Quantity = 800 (Buy Long)

2) Entry Price = USD $10,500

3) Effective Leverage = 25x

4) Initial Margin of Position = (800 / 10,500) x (100 / 25x)% = (800 / 10,500) x 4% = **0.00304762 BTC**

**If the platform's Last Traded Price of BTC goes up to USD $12,000, your unrealized PNL% = 312%. Please follow the calculation below to understand how 312% is derived. **

P&L in BTC= [ (1/10,500) - (1/12,000) ] x 800 = **0.00952381 BTC **

P&L% = (P&L in BTC / initial margin of position) x 100% =**(0.00952381 BTC / 0.00304762 BTC) x 100% = 312%**

Therefore, the unrealized P&L in USD shown in your My Positions tab = **0.00952381 BTC x USD $12,000 = USD $114.29. **

**So, at this point, what happens if you increase your leverage to 50x? Do you double up on your profits? Answer: NO! **

If leverage is increased to 50x, the initial margin of the position will reduce. Therefore, the NEW initial margin = **(800 / 10,500) x (100 / 50x)% = (800 / 10,500) x 2% = 0.00152381 BTC**

P&L in BTC = [ (1/10,500) - (1/12,000) ] x 800 = **0.00952381 BTC **

P&L% = (P&L in BTC / NEW initial margin of position) x 100% = **(0.00952381 BTC / 0.00152381 BTC) x 100% = 624%**

After changing the leverage to 50x, even though the P&L% increases to 624%, but your P&L in BTC is still the same at **0.00952381 BTC **

**Key Points: **

1) P&L is influenced by **(a) Entry Price (b) Exit Price (c) Contracts Quantity Size**

2) Leverage will affect how much the initial margin is required to open a particular Contract Quantity Size at an Entry Price Point

3) Leverage does not directly multiply your profits in BTC by a fixed number (25 x USD 100 = USD 2500 is wrong)

4) P&L% is calculated by taking P&L in BTC / Initial Margin

5) Increasing your leverage may increase your P&L%, but it does not increase your actual P&L in BTC.

6) The higher the leverage, the lower the initial margin, but the more prone the position is to liquidation.

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