> For the complete documentation index, see [llms.txt](https://flipper-3.gitbook.io/flipper-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://flipper-3.gitbook.io/flipper-docs/flipper-v2/trading-mechanics/collateral-margin-and-pnl.md).

# Collateral, Margin and PnL

Learn how collateral, margin, leverage, and PnL affect your Flipper V2 account health.

Collateral supports your open positions. Margin determines how much of that collateral is required, while PnL tracks how the value of your positions changes.

## Core terms

| Term                     | Meaning                                                                                                 |
| ------------------------ | ------------------------------------------------------------------------------------------------------- |
| **Collateral**           | Supported assets deposited into the Trading Account and counted toward account value.                   |
| **Collateral value**     | The risk-adjusted value of collateral. Some assets may contribute less than their full market value.    |
| **Margin**               | Collateral required to support positions and open orders.                                               |
| **Available balance**    | The part of the Trading Balance not currently required as margin.                                       |
| **Notional value**       | The full value of a position, before accounting for leverage.                                           |
| **Leverage**             | The relationship between position size and required margin. Higher leverage increases liquidation risk. |
| **Account Margin Ratio** | A measure of account health based on collateral value relative to open-position exposure.               |
| **LTV**                  | A risk metric shown for non-USDC collateral or borrowed USDC exposure. Lower is generally safer.        |

## Cross margin

When **Cross** margin is selected, eligible collateral is shared across open positions in the Trading Account. Profit or loss on one position can therefore affect the safety of other positions.

Open positions and pending orders can both reduce the amount available for new trades or withdrawals.

## Profit and loss

### Unrealized PnL

Unrealized PnL is the current estimated profit or loss on an open position. It changes as the Mark Price changes and is not final until the position is reduced or closed.

### Realized PnL

Realized PnL is created when a position is reduced or closed. Trading fees and funding payments can affect the final result.

### PnL settlement

Realized or unrealized PnL may need to be settled into the account's USDC balance before it becomes withdrawable. Settlement is an accounting step and does not close an open position.

{% hint style="info" %}
The total account value can include PnL that is not yet available to withdraw. Use the **Available to withdraw** value rather than the headline balance when planning a withdrawal.
{% endhint %}

## What increases liquidation risk?

* increasing leverage or position size;
* falling collateral value;
* growing unrealized losses;
* withdrawing collateral;
* funding payments against the position;
* adding exposure while the margin ratio is already low.

A position becomes subject to liquidation when the Account Margin Ratio falls below the required Maintenance Margin Ratio. The system evaluates this using the **Mark Price**, not simply the last traded price.

{% hint style="danger" %}
If liquidation begins, open orders can be cancelled and withdrawals can be restricted. Monitor the risk indicators and estimated liquidation price shown in the interface.
{% endhint %}