# Contract Calculation

For a typical transaction of CFD, we have a set of states

$\mathbb{S}$

:$\mathbb{S}=\{S_{open},\cdots,S_t,\cdots,S_{close}\}$

- $S_{open}$
*is the state at the time which the position is opened.* - $S_{close}$
*is the state at the time which the position is closed*. - $S_t$
*is the state of each moment*$t$*during the holding period of position.*

For each transaction with a given set

$\mathbb{S}$

, trader deposit initial margin $m$

at $S_{open}$

and withdraw the remaining equity $e$

at $S_{close}$

.The amount of remaining equity

$e$

is determined by $m$

, $S_{open}$

, $S_{close}$

and $S_{liquidation}$

, which can be described as follows:$e=\begin{cases}
\boldsymbol{f}(m,S_{open},S_{close}),&S_{liquidation}\notin\mathbb{S}\\
\\
0,&S_{liquidation}\in\mathbb{S}
\end{cases}$

- $S_{liquidation}$
*means the state that the liquidation is triggered.*

To illustrate, if the liquidation is not triggered during the holding period of position, then

$e$

shall be a function of $m$

, $S_{open}$

and $S_{close}$

, while if the liquidation is triggered during the holding period of position, then $e=0$

.Since

$m$

, $S_{open}$

, $S_{close}$

and $S_{liquidation}$

are always known for any given moment of a position, $e$

can be calculated accordingly.The calculation process of remaining equity

$e$

is called **contract calculation**.