Profit and Loss (PnL)
PnL, or profit and loss, measures the realised or unrealised financial gain or loss on a trade, position, strategy, or portfolio.
✦ Key Insight
PnL is one of the main ways traders measure performance. It shows whether a position is currently profitable, whether a completed trade made money, and how fees or funding costs affect the final result. However, PnL alone does not show whether a trade used excessive risk. A trader may generate a large profit while taking an unsustainable amount of leverage.
✕ Common Misconceptions
Confusing realised and unrealised PnL
Ignoring fees and funding
Measuring returns without considering position size
Treating an open profit as guaranteed
Using exchange PnL figures without checking the calculation method
Detailed Explanation
How It Works
Unrealised PnL reflects the current gain or loss on an open position. It changes as the market price changes.
Realised PnL is recorded after part or all of the position is closed.
A complete calculation may account for:
Entry and exit prices
Position size
Trading fees
Funding payments
Borrowing costs
Gas fees
Slippage
FAQs
Can unrealised profit disappear?
Yes. It changes until the position is closed.
Is PnL the same as ROI?
No. PnL is commonly expressed as a monetary amount, while ROI measures return relative to invested capital.
Why might two platforms show different PnL?
They may use different reference prices, fee assumptions, or accounting methods.