Understanding profit and loss (P&L) metrics in trading is essential for evaluating performance and optimizing strategies. Traders often encounter discrepancies between Unrealized P&L, Realized P&L, and Closed P&L, primarily due to fees and funding costs. This guide clarifies these concepts and provides actionable insights to interpret your trading outcomes accurately.
Key P&L Metrics Explained
1. Unrealized P&L
- Definition: An estimated profit/loss based on the current Last Traded Price (LTP).
Characteristics:
- Updates in real-time with price fluctuations.
- Excludes trading fees, funding fees, and closing costs.
- Serves as a preliminary indicator, not the final P&L.
👉 Learn how leverage impacts Unrealized P&L
Formula:
Unrealized P&L = Position Size × (Entry Price − Current LTP)2. Realized P&L
- Definition: Captures actual gains/losses from partially closed positions.
Includes:
- Fees to open/add to positions.
- Funding fees accrued during holding.
- Profits/losses from partial closures.
- Reset upon full position closure.
Closed P&L: The Final Calculation
Accessible via Orders → Closed P&L, this metric reflects the net outcome after all fees:
| Component | Included? | Notes |
|---|---|---|
| Position P&L | Yes | Based on average entry/exit prices. |
| Trading Fees | Yes | Opening, closing, and adjustments. |
| Funding Fees | Yes | Periodic costs for perpetual contracts. |
| Leverage | No | Affects ROI% but not the absolute P&L amount. |
Formula:
Closed P&L = Position P&L − Total Trading Fees − Total Funding FeesWhy Unrealized ≠ Closed P&L: A Case Study
Scenario:
- Entry Price: 43,807.30 USDT
- Exit Price: 43,704.00 USDT
- Quantity: 0.002 BTC
Calculations:
Unrealized P&L:
0.002 × (43,807.30 − 43,696.60) = +0.2214 USDTRealized P&L:
-0.0339 USDT (includes opening fee + estimated closing fee)Closed P&L:
0.2066 (Position P&L) − 0.0963 (Fees) − (−0.0142 (Funding)) = +0.1245 USDT
Key Insight: Even with a positive Unrealized P&L, fees can reduce final profits or turn them into losses.
FAQs
Q1: Why is my Closed P&L negative when Unrealized was positive?
A: Trading and funding fees deducted at closure may outweigh the position’s profit.
Q2: How can I estimate Closed P&L before exiting?
A: Subtract Realized P&L from Unrealized P&L. If the result is negative, expect a loss.
Q3: Does leverage affect Closed P&L?
A: No—leverage impacts ROI percentage but not the absolute P&L amount.
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Pro Tips
- Monitor Funding Rates: High funding fees erode profits in perpetual contracts.
- Fee Structures: VIP tiers reduce trading costs, improving net P&L.
- Use Limit Orders: Lower fees vs. market orders preserve gains.
By mastering these metrics, traders can refine strategies and avoid surprises when closing positions.