Capital and risk
Position size and notional value
Understand the difference between contract quantity, notional exposure, collateral, and the capital at risk in a perpetual position.
Also called: notional, exposure, trade size
Definition
Position size and notional value — Position size describes the quantity of derivative exposure a trader holds. Notional value expresses that exposure in a reference currency, commonly by multiplying quantity by the relevant asset price. Notional is not the same as collateral, account balance, or maximum loss; it is the market value on which PnL and many costs are based.
In plain English
A position can be described in asset units, contracts, or a currency value. “Long 0.5 ETH” is a quantity. If ETH is valued at $3,000, that quantity represents $1,500 of notional exposure. The trader might support it with much less than $1,500 of collateral.
Always check which price a venue uses for notional. Entry price, mark price, and current execution price can produce different values.
How it works
For a linear contract, a common simplified relationship is:
notional value = position quantity × reference price
Inverse and quanto contracts can behave differently. Contract specifications may also assign a multiplier to each contract. Notional can change as the reference price moves even when the number of contracts stays fixed.
Why it matters
Funding, trading fees, price impact, margin requirements, and PnL are often calculated from notional or quantity rather than the collateral deposit. Looking only at collateral can therefore make the economic size of a position seem smaller than it is.
Worked example
A trader opens exposure equal to 0.5 ETH when the relevant price is $3,000. The notional value is 0.5 × $3,000 = $1,500.
If the position is supported by $300 of collateral, its starting leverage is $1,500 ÷ $300 = 5×. If ETH rises to $3,200, the same 0.5 ETH quantity has a current notional of $1,600 under that price.
How it works on Lynx
Lynx documentation defines position size as position collateral multiplied by leverage. The opening fee is deducted before leverage is applied, so the final position size uses the post-fee collateral amount rather than the full amount initially entered.
Position size and PnL are accounted for in the selected collateral asset. The traded instrument remains a separate synthetic price exposure.
Common misconception
A
$10,000notional position does not mean the trader paid$10,000, borrowed exactly$10,000, or can lose only the collateral shown beside it. Those are separate questions.
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Related definitions and practical guides.
Sources and review
Written by Lynx Editorial. Reviewed by Lynx Protocol Team on July 31, 2026. Review policy.