# How to Understand Profit and Loss

Profit and loss is always the top priority for every trader.

Ann enters a 100,000 long position at \$9,266.5 by market order. On the position tab, she can review her unrealized P&L real time.

Unrealized P&L

Unrealized P&L refers to the estimated profit and loss of an open position, also known as floating P&L. The unrealized P&L displayed in the position tab is calculated based on the last traded price.

• Unrealized P&L – Last Traded Price (LTP)

Ann’s long position was entered at \$9,266.5 and the LTP is \$9,433.

Unrealized P&L (LTP) = 100,000 x [ (1/9,266.5) – (1/9,433) ]* = 0.1904 BTC

*Unrealized P&L = Contract Qty x [(1/Avg Entry Price) – (1/Last Traded Price)]

This unrealized P&L is calculated as if the position can be closed at LTP. However, even if Ann closes her position immediately, the execution price may deviate from LTP.

If Ann hovers the mouse cursor over unrealized P&L, a different figure will be displayed, which is unrealized P&L based on mark price.

• Unrealized P&L – Mark Price

Ann’s long position was entered at \$9,266.5 and mark price is now \$9,428.57.

Unrealized P&L (Mark Price) = 100,000 x [ (1/9,266.5) – (1/9,428.57) ] ** = 0.1854 BTC

** Unrealized P&L = Contract Qty x [(1/Avg Entry Price) – (1/Mark Price)]

The Mark Price is not a traded price, but rather a reference price for liquidation trigger. Therefore, the unrealized P&L based on mark price also serves as a reference to manage liquidation expectation.

You may refer to our official guide on P&L calculation (Inverse) to find out more about unrealized P&L for short positions.

Please also note that the unrealized P&L does not include any transaction or funding fees while holding the position.

Unrealized P&L%

The Unrealized P&L% is essentially the Return on Investment (ROI) of the position.

Unrealized P&L% = [ Position’s unrealized P&L / Position Margin*** ] x 100%

***Position Margin=Initial Margin+Margin Replenishment +Fee to close

In Ann’s case, here is a summary of the unrealized P&L and unrealized P&L% under different leverage settings.

Under different leverages, the absolute values of the unrealized P&L remain constant. However, the unrealized P&L% increases with the leverage. The increase of unrealized P&L% is a result of reduction of initial margin as leverage increases.

Understanding Closed P&L

Closed P&L refers to the realized P&L of a position upon exit. It’s a total sum of the profit/loss from price difference and also transaction and funding fees. Closed P&L is the actual number credited to or deducted from wallet balance.

Closed P&L = Position P&L – Fee to open – Fee to close – Total funding fees paid/received

Ann’s 100,000 BTCUSD long position was entered at \$9,266.50. BTC price rises for almost \$200 and she decides to take profit. She places a market order and closes the position at \$9,417.5.

The realized profit from price change is 0.173 BTC = 100,000 x (1/9,266.5 – 1/9,417.5). The position is entered and closed by market order, and thus she pays 0.075% transaction fees, which is 0.008 BTC and 0.0079 BTC respectively. She receives 0.0018 BTC funding payment while holding the position.

The closed profit of this position is 0.1589 BTC = 0.173 BTC – 0.008 BTC – 0.0079 BTC + 0.0018 BTC.