Crypto glossary

PnL (realized and unrealized)

Definition

PnL means profit and loss: unrealized PnL is the paper result of an open position, realized PnL the gain or loss locked in once it is closed.

Unrealized PnL measures how much an open position is up or down at the current price; on derivatives exchanges it is calculated against the mark price. Realized PnL is booked when all or part of the position is closed and also includes trading fees and, for perpetuals, funding payments received or paid. Many platforms also show ROE, the return on the margin used, which looks much larger than the price move when leverage is high.

Traders share PnL screenshots on social media, and exchanges display PnL cards for that purpose, which is why the term shows up constantly in crypto culture. Fund managers and trading desks report daily PnL, and tax rules generally care about realized gains rather than paper ones.

Unrealized gains are not money in hand: a strong move can erase them before the position is closed, and on some exchanges unrealized profit can be used as margin, adding risk. A ROE of 200 percent at 50x leverage reflects only a 4 percent price move, and the same leverage can turn a small move into a total loss.

Example

A trader long 1 BTC from 90,000 dollars sees 6,000 dollars of unrealized PnL with bitcoin at 96,000; selling half the position turns 3,000 dollars into realized PnL, minus fees.

Related terms

Latest articles on PnL