Exercise 2: Calculation Practice and Risk Metrics

⏰ Time Investment: 45-60 minutes 🎯 Goal: Master the mathematical calculations needed for safe perpetual trading

📚 Required Reading Integration 📖 Primary: Lesson 2: The Mathematics of Perpetual Trading 📖 Supporting: Lesson 1: Understanding Perpetual Futures Fundamentals

🔢 Phase 1: Funding Rate Calculations (15 minutes)

Risk Metrics Summary Template

P&L Calculation Worksheet

Liquidation Price Calculator Worksheet

Exercise 1: Basic Funding Payment

Scenario: Long ETH perpetual position

• Position Size: $5,000

• Funding Rate: 0.01% per hour

• Holding Period: 12 hours

Calculate:

• Hourly payment: $_______

• Total payment (12 hours): $_______

• Annualized rate: _______%

Exercise 2: Funding Cost Comparison

Compare funding costs across different rates:

Funding Rate	Hourly	Daily (24h)	Weekly	Annualized
0.005%	$_______	$_______	$_______	_______%
0.01%	$_______	$_______	$_______	_______%
0.02%	$_______	$_______	$_______	_______%

Position: $10,000 notional size

Question: Which funding rate would make a trade unprofitable if price only moves 1% in your favor over 7 days?

• Your answer: _________________________________

Exercise 3: Break-Even Analysis

Setup:

• Position Size: $8,000

• Trading Fees: 0.05% ($4)

• Funding Rate: 0.015% per hour

• Holding Period: 48 hours

Calculate:

• Total fees: $_______

• Total funding: $_______

• Total costs: $_______

• Break-even price movement: _______%

Interpretation: You need at least _______% price movement just to break even.

📊 Phase 2: Margin and Leverage Calculations (15 minutes)

Exercise 4: Position Sizing

Scenario: You have $2,000 available for trading

Calculate position size for each leverage:

Leverage	Position Size	Initial Margin Required
2x	$_______	$_______
5x	$_______	$_______
10x	$_______	$_______

Question: If you want to risk only $500, what leverage should you use for a $2,000 position?

• Your answer: _______

Exercise 5: Liquidation Price Calculations

Scenario: Long ETH position

• Entry Price: $2,500

• Margin: $1,000

• Leverage: 10x

• Maintenance Margin: 0.5%

Calculate:

• Position Size: $_______

• Liquidation Price: $_______

• Safety Buffer: _______%

Scenario: Short ETH position

• Entry Price: $2,500

• Margin: $1,000

• Leverage: 10x

• Maintenance Margin: 0.5%

Calculate:

• Position Size: $_______

• Liquidation Price: $_______

• Safety Buffer: _______%

Exercise 6: Margin Ratio Analysis

Current Position:

• Position Size: $10,000

• Current Margin: $1,500

• Entry Price: $2,500

• Current Price: $2,400

Calculate:

• Current Margin Ratio: _______%

• Unrealized P&L: $_______

• Remaining Margin: $_______

• New Margin Ratio: _______%

• Distance to Liquidation: _______%

⚠️ Phase 3: Risk Assessment (15 minutes)

Exercise 7: Liquidation Risk Analysis

Position Details:

• Long BTC at $50,000

• Margin: $5,000

• Leverage: 10x

• Maintenance Margin: 0.5%

Calculate:

• Position Size: $_______

• Liquidation Price: $_______

• Maximum Drawdown Before Liquidation: _______%

Risk Scenarios:

Price Movement	Unrealized P&L	Remaining Margin	Margin Ratio	Status
-5%	$_______	$_______	_______%	_______
-8%	$_______	$_______	_______%	_______
-9%	$_______	$_______	_______%	_______
-10%	$_______	$_______	_______%	_______

Exercise 8: Funding Rate Impact

Scenario: Holding long position during high funding period

Setup:

• Position Size: $20,000

• Funding Rate: 0.02% per hour (very high)

• Holding Period: 30 days

Calculate:

• Daily funding cost: $_______

• 30-day funding cost: $_______

• Annualized rate: _______%

Question: If ETH only moves 2% in your favor over 30 days, what is your net P&L?

• Price gain: $_______

• Funding cost: $_______

• Net P&L: $_______

• ROI: _______%

Interpretation: Is this trade profitable? (Yes / No)

• Reasoning: _________________________________

💰 Phase 4: Profit and Loss Calculations (15 minutes)

Exercise 9: Complete P&L Analysis

Long Position:

• Entry: $2,500

• Exit: $2,600

• Position Size: $10,000 (5x leverage on $2,000 margin)

• Trading Fees: 0.05% (entry + exit = $10)

• Funding: 0.01% per hour for 48 hours

Calculate:

• Price gain: $_______

• Trading fees: $_______

• Funding costs: $_______

• Net P&L: $_______

• ROI on margin: _______%

Exercise 10: Short Position P&L

Short Position:

• Entry: $2,500

• Exit: $2,400

• Position Size: $8,000 (4x leverage on $2,000 margin)

• Trading Fees: 0.05% (entry + exit = $8)

• Funding: -0.005% per hour (you receive) for 72 hours

Calculate:

• Price gain: $_______

• Trading fees: $_______

• Funding received: $_______

• Net P&L: $_______

• ROI on margin: _______%

Exercise 11: Break-Even Price

Setup:

• Long ETH at $2,500

• Position Size: $10,000

• Margin: $2,000

• Trading Fees: 0.05% ($10 total)

• Funding: 0.01% per hour

• Target Holding: 7 days

Calculate:

• Total funding (7 days): $_______

• Total costs: $_______

• Break-even price: $_______

• Break-even price movement: _______%

Question: If you exit at $2,550, what is your net profit?

• Your calculation: _________________________________

• Net profit: $_______

📈 Phase 5: Position Management Scenarios (15 minutes)

Exercise 12: Adding Margin

Current Position:

• Entry: $2,500

• Current Price: $2,450

• Position Size: $10,000

• Current Margin: $1,000

• Leverage: 10x

• Liquidation Price: $2,250

You add $500 margin:

Calculate:

• New Total Margin: $_______

• New Position Size: $_______ (unchanged)

• New Leverage: _______x

• New Liquidation Price: $_______

• New Safety Buffer: _______%

Question: How much did the safety buffer improve?

• Improvement: _______%

Exercise 13: Partial Close

Current Position:

• Entry: $2,500

• Current Price: $2,600

• Position Size: $10,000

• Margin: $2,000

• Unrealized P&L: +$400

You close 50% of position:

Calculate:

• Amount closed: $_______

• Realized P&L: $_______

• Remaining Position Size: $_______

• Remaining Margin: $_______

• Remaining Unrealized P&L: $_______

✅ Self-Assessment

Rate your calculation skills (1 = Need more practice, 5 = Fully confident):

• Funding rate calculations: __/5

• Liquidation price calculations: __/5

• Position sizing: __/5

• P&L calculations: __/5

• Risk metrics: __/5

Areas needing more practice: _________________________________

🎯 Next Steps

If you struggled with any calculations:

• Review Lesson 2 formulas

• Practice with different scenarios

• Use a spreadsheet to verify answers

• Re-calculate until confident

If all calculations correct:

• Proceed to Exercise 3 (Architecture Analysis)

• You're ready for practical trading!

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