No. Applying leverage on Phemex influences the initial margin rate necessary to initiate a position, and opting for higher leverage doesn't directly magnify your gains.
Let’s take a look at the below example:
Trader A initiates a long position on Phemex with a quantity of 1 BTC for BTCUSDT USDT margin contract at a price of 60,000. Please refer to the table below for the correlation between leverage and initial margin.
Note:
1) Position Quantity and Open Value is the same regardless of the leverage changes
2) Leverage determines the Initial Margin Rate.
The higher the leverage, the lower the initial margin rate, and thus a lower initial margin amount is required to open the same value of the position.
3) The initial margin amount is calculated by taking Open Value multiplied by the initial margin rate.
Next, Trader A is considering closing his 1 BTC Buy Long position at a price of 65,000. Refer to the table below shows the relationship between leverage, Unrealized PnL, and Unrealized PnL%.
Note:
1) Note that despite applying different leverages to the same position quantity, the resulting Unrealized PnL remains constant at 5,000 usdt when the close price is USD 65,000.
Hence, a higher leverage does not necessarily lead to a higher PnL.
2) Unrealized PnL is computed based on the following factors: Position Quantity, Entry Price, and Close Price.
- A larger Position Quantity results in a greater PnL.
- A wider price gap between the entry and exit prices leads to a higher Unrealized PnL.
3) Unrealized PnL% is determined by taking Position Unrealized PnL/ Initial Margin Amount: (B)/(A)
- As leverage increases, the Initial Margin Amount (A) decreases, resulting in a higher Unrealized PnL%.
- For more info, please refer to the articles below
https://phemex.com/help-center/profit-and-loss-2
4) The examples of Unrealized PnL and PnL% provided above do not factor in any trading fees or funding fees. For further information, please consult the following articles.
