Explaining isolated margin trading position and ROI

[Estimated Reading Time: 6 mins]

This article explains how isolated margin positions, ROI, and unrealized PnL work on Bitget. It helps you understand your margin trades more clearly and manage them with confidence.

Glossary of Key Terms

Term	Definition
Position	Your net long or short exposure for a trading pair.
Position asset	The actual funds from your trade involved in the open position.
Close position	A trade that fully offsets your current position (e.g., selling all in a long, or buying back all in a short).
Position PnL	The unrealized profit or loss of your open position.
Position ROI	The percentage gain or loss of your position based on the index price and cost basis.
Cost basis	The average entry price of your current position.
Index price	A real-time aggregated market price used to calculate ROI and PnL.

Understanding Isolated Margin Trading Positions

An isolated margin trading position reflects the net result of your trading activity within a specific trading pair using isolated margin mode. This position indicates whether you currently hold a long, short, or closed position based on your total buys and sells. Understanding this concept helps you assess your margin account’s profit and loss, and make more informed decisions.

Each isolated margin position is independent. It is tied only to the trading pair and is not affected by other positions or pairs. When you place trades (buy or sell) under isolated margin mode, the system calculates your position size and direction using a simple formula:

Net Position = Total buy volume – Total sell volume

Based on the result, the position is classified as follows:

• If net position > 0, you have a long position

• If net position = 0, your position is closed

• If net position < 0, you have a short position

For example, if you buy 10 BTC and later sell 3 BTC, your net position is +7 BTC, which is a long position. If you then sell another 10 BTC, your net position becomes –3 BTC, a short position. If you then buy 3 BTC, your net position is zero and the position is fully closed.

Difference between Position and Asset

A position is the net result of your trading activity, reflecting the size and direction of your open trade. An asset, however, refers to the funds (balance or debt) available in your margin account for that trading pair.

Your asset can change due to transfers, interest, or repayment, but it does not directly affect your position. Similarly, a position is only influenced by actual trades (buys or sells), not by deposits or withdrawals.

Example:

• A user holds 1 BTC and borrows 2 BTC to enter a short position.

• They sell 3 BTC and receive 90,000 USDT in margin trading.

• In this case, the user’s isolated margin position for BTC/USDT is a short position of 3 BTC.

• Their assets consist of 90,000 USDT (from selling) and a debt of 2 BTC (borrowed).

The position will show relevant data including:

• Position cost basis

• Position asset

• Position PnL (Profit and Loss)

How Positions Change Based on Trading Activity?

In isolated margin trading, each action either increases or decreases your position:

• Buying increases your position (makes it more long or less short)

• Selling decreases your position (makes it more short or less long)

The direction and size of your position depend entirely on trade volume. Here’s a step-by-step breakdown:

1. You buy 10 BTC → position becomes +10 BTC (long)

2. You sell 3 BTC → position becomes +7 BTC (long)

3. You sell 10 BTC more → net position is –3 BTC (short)

4. You buy 3 BTC → position becomes 0 (closed)

Note: Only trading affects your position. Deposits, transfers, and borrowing do not change your position directly.

Interaction between position and transfers

Sometimes, your transfers may appear to impact your position. Here's how it works:

• If you hold 1 BTC asset and have a 10 BTC long position, and you transfer 2 BTC out, the system will:

  • First deduct the 1 BTC asset

  • Then reduce the long position by 1 BTC

  • The new position becomes 9 BTC long

• If you hold a 7 BTC long position, and transfer 2 BTC in, the position remains at 7 BTC long, while your asset balance increases by 2 BTC.

This shows that positions are directional and trade-based, while assets are affected by transfers and borrowing. Your trading position is only impacted by actual trading activity (buy/sell orders), not by funding actions.

Understanding Position Cost Basis and ROI

Your position cost basis is the average price of your holdings based on your executed trades. It changes only when you make a trade in the same direction as your current position.

The cost basis is calculated differently for long and short positions:

• Long position cost basis = (Previous position size × old cost basis + new buy volume × buy price) ÷ updated total size

• Short position cost basis = (Previous position size × old cost basis + new sell volume × sell price) ÷ updated total size

If you make a trade in the opposite direction, and the result is a reversal (e.g., from long to short), the system will reset your position cost basis to the price of the reversal trade.

Example:

Imagine you already hold a short position of 2 BTC, and your current cost basis is $90,000.

Next, you sell another 2 BTC at $88,000, which adds to your short position. Since you're trading in the same direction (short → short), the system will recalculate your cost basis using the weighted average of the existing position and the new trade.

Here’s how the new cost basis is calculated:

• Your existing 2 BTC were shorted at $90,000

• Your new 2 BTC are shorted at $88,000

• The total short position becomes 4 BTC

The new cost basis is the average of all 4 BTC:

(2 BTC × $90,000 + 2 BTC × $88,000) ÷ 4 BTC = ($180,000 + $176,000) ÷ 4 = $89,000

So, after the trade, you now have a 4 BTC short position with a new cost basis of $89,000.

ROI calculation in isolated margin trading

ROI (Return on Investment) helps you evaluate the performance of your position. Bitget calculates ROI with or without considering leverage.

Without leverage:

• Long position ROI = (Current price – cost basis) ÷ cost basis

• Short position ROI = (Cost basis – current price) ÷ cost basis

With leverage:

Bitget can also multiply your ROI by the maximum leverage used for that isolated pair.

• Long position ROI with leverage = ROI × leverage multiple

• Short position ROI with leverage = ROI × leverage multiple

This helps you see how much your profits (or losses) are magnified by your selected leverage.

Note: ROI is based on the index price, which reflects the current market price across major exchanges.

Unrealized PnL in Isolated Margin Trading

Unrealized PnL (Profit and Loss) is the potential gain or loss of your open position based on the latest index price. It updates in real time but is not final until the position is closed.

Calculation:

• Long position unrealized PnL = Position size × (Current price – cost basis)

• Short position unrealized PnL = Position size × (Cost basis – current price)

If your position is fully closed (buy volume = sell volume), unrealized PnL becomes zero, regardless of asset balance or previous trades.

Example:

• Long 3 BTC at cost basis 2,000 USDT

• Current index price = 3,000 USDT

• Unrealized PnL = 3 × (3,000 – 2,000) = 3,000 USDT

If you had a short position under the same conditions:

• Unrealized PnL = 3 × (2,000 – 3,000) = –3,000 USDT

FAQs

1. What is an isolated margin position?
It reflects your open trade size and direction for a specific trading pair using isolated margin. It is independent from other pairs.

2. How is the position size determined?
It is calculated as your total buy volume minus total sell volume for that pair.

3. Can transfers affect my position?
No. Only trades change your position. Transfers affect your asset balance but not your position size.

4. When does the position cost basis reset?
When your trade reverses the direction of your position (from long to short or vice versa), the cost basis is reset to the new trade price.

5. How does leverage impact ROI?
Leverage increases both your potential profits and losses by multiplying the ROI based on your leverage setting.

6. Why is my unrealized PnL showing zero even though I still have assets in the account?
Unrealized PnL is only calculated when you have an open position (either long or short). If your total buy volume equals your total sell volume, your position is considered closed, even if you still hold assets like USDT or BTC in your account.