# 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.

- Canonical page: https://lynx.finance/glossary/position-size-and-notional-value/
- Published: 2026-07-31
- Updated: 2026-07-31
- Last reviewed: 2026-07-31
- Written by: Lynx Editorial
- Technical review: Lynx Protocol Team
- Category: Capital and risk
- Also known as: notional, exposure, trade size
- Related terms: [Leverage](https://lynx.finance/glossary/leverage/), [Collateral](https://lynx.finance/glossary/collateral/), [Realized and unrealized PnL](https://lynx.finance/glossary/realized-and-unrealized-pnl/), [Funding rate](https://lynx.finance/glossary/funding-rate/)
- Related articles: [On-chain perpetual futures, explained](https://lynx.finance/blog/onchain-perpetual-futures-explained/), [Leverage, margin, and position size in crypto perpetuals](https://lynx.finance/blog/leverage-margin-position-size/)

## 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](https://lynx.finance/glossary/funding-rate/), 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 `$10,000` notional 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.

## Sources

- [Funding rates for international derivatives](https://help.coinbase.com/en/coinbase/derivatives/funding-rate) — Coinbase (technical)
- [Futures Glossary](https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CFTCGlossary/index.htm) — U.S. Commodity Futures Trading Commission (regulatory)
- [Frequently Used Terms in Lynx](https://lynx-finance.gitbook.io/lynx-finance/community/glossary) — Lynx Finance (primary)