I want to understand how the Short Sell Profit/Loss works as I am having a hard time wrapping my head around this.
Example.
I want to short sell 10 btc at $10,000. I have $10,000 in my account. I use 10x leverage. So the total position size would be $100,000 out of which I have borrowed $90,000.
Now the price of BTC drops to $9000. I buy back the BTC at this price. The amount would be $90,000 which i also have to return to th exchange. Where does my profit come from?
Where am i falling short in understanding how the profit calculates.
I have read the Binance Docs where its is written that Profit on Shorts is = (Entry - Exit) * Quantity. But that does not give too much clarity to me. Can someone explain it in simple terms.
Thank you.
Hi, please consult this article https://www.binance.com/en/support/faq/how-to-calculate-profit-and-loss-for-futures-contracts-3a55a23768cb416fb404f06ffedde4b2 → " Profit and Loss calculations for USDⓈ-M Futures contracts (BTCUSDT)".
It should be quite straightforward to understand the profit logic.