Profit and Loss (PnL)
A financial metric that measures the gains or losses of a trading position.
What Is Profit and Loss (PnL)?
Profit and Loss (PnL) is a financial metric that shows how much money you have made or lost in trading or investing over a specific period. It reflects the difference between your initial investment cost and the current or selling value of that investment.
How It Works
- Profit: Occurs when the selling price of an asset is higher than the purchase price. For example, if you buy a stock at $100 and sell it at $150, your profit is $50.
- Loss: Occurs when the selling price is lower than the purchase price. For example, if you buy a cryptocurrency at $1,000 and sell it at $800, you incur a $200 loss.
- PnL Calculation:
- Profit = Selling Price - Purchase Price.
- Loss = Purchase Price - Selling Price.
Real-Time Tracking
- Unrealized PnL: Represents potential profit or loss on open positions that haven’t been closed yet. It shows how much you would gain or lose if you sold at the current price.
- Realized PnL: The actual profit or loss from positions that have been closed or completed.
In short, PnL is a quick way to see how your trading is performing—whether you’re in the green with profits or in the red with losses.