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Notional Value
Notional value is the total value of the market exposure represented by a derivative position. For example, a perpetual position controlling $10,000 worth of BTC exposure has a notional value of approximately $10,000, even if the trader used much less capital as margin.
Why it matters to you
This is one of the easiest concepts for new leveraged traders to misunderstand. The amount of margin committed to a trade is not necessarily the same as the amount of market exposure being controlled. A trader should know the notional value of a position because profits, losses, fees and risk can depend on the size of that exposure.
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