Profit and loss, often shortened to P and L, is the running gain or loss on your positions, the difference between what you paid and what your contracts are worth now or settle at.
Last reviewed 1 September 2025 · Educational, not advice
P and L is simply the scoreboard of a position. For a single contract it is the value now, or the settlement value, minus what you paid, after fees. Across a book of positions it is the sum of all of those. Most venues show it in two forms, and keeping them apart is the first thing to understand.
Realized P and L is locked in. It is the result of trades you have already closed or contracts that have settled, so the number can no longer change. Unrealized P and L is the paper gain or loss on positions you still hold, marked at the current price. It moves every time the market moves and is not money in hand until you close the position or it settles. A large unrealized gain can shrink or reverse before you act on it.
Honest P and L accounting includes costs. Fees on entry and exit, and any funding or withdrawal charges, all reduce the real figure, so a position that looks slightly green on price alone can be flat or negative once costs are counted. Over many trades these frictions matter more than beginners expect, which is why a clear running record beats a rough memory.
P and L describes the past and the present, not the future. A winning streak does not mean the next trade is favoured, and a loss does not mean you are owed a recovery. Trying to trade your way out of a drawdown, often called chasing, is one of the most common ways people deepen a loss. The money at stake is genuinely at risk, and a position can go to zero.
You buy a contract at thirty cents and later it trades at forty five cents. Your unrealized gain is fifteen cents per contract, on paper. If you sell at forty five, that becomes a realized gain of fifteen cents minus fees. If instead the contract settles worthless, your realized result is a loss of the full thirty cents you paid.
Illustrative only. Numbers are examples, not a quote or a prediction, and exclude fees.
A paper gain is not money in hand, and chasing a loss to fix a red P and L is a common way to make it worse. Any position on these venues can lose, and a contract can settle worthless. Stake only what you can afford to lose, never to chase a loss, and never on borrowed money. If it stops feeling like a free choice, step back. In the United States you can call or text the helpline on 1-800-GAMBLER or visit ncpgambling.org.
The gain or loss on your positions, what they are worth now or at settlement minus what you paid, after fees.
Realized is locked in from closed or settled positions and cannot change. Unrealized is the paper figure on open positions and moves with the market.
It should. Entry, exit, and funding costs reduce the real result, so honest accounting counts them rather than looking at price alone.
Because memory flatters. A clear record of costs and outcomes shows your true result and discourages chasing losses.
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