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Differences between unrealized PNL and realized PNL
Differences between unrealized PNL and realized PNL
Judith TruBit avatar
Written by Judith TruBit
Updated over a week ago

When trading Futures, users experience gains and incur losses. Here, there are two types of gains and losses (PNL): unrealized PNL from open positions and realized PNL from closed positions. Since PNL in futures trading is the primary concern for most futures traders, today we'll delve into the calculation of unrealized PNL and realized PNL.

  1. Unrealized PNL: It's the gain or loss that hasn't yet been realized because positions in the market are still open. The calculation of this PNL varies according to the current market price and is estimated to use the "fair market price" to avoid manipulations.

    1. Linear contracts: The formula depends on whether the position is long (buy) or short (sell).

    2. Inverse contracts: A formula is used that adjusts the calculation based on the average opening price and the current market price.

  2. Realized PNL: Reflects the final gains or losses once the position is closed. It includes commissions and fees and is calculated by the difference between the opening price and the closing price of the position.

    1. Linear and inverse contracts: The formula also varies depending on whether it's a long or short position and is based on the average price.

As mentioned earlier, to avoid price manipulations, TruBit calculates unrealized PNL using a fair mark price. Meanwhile, realized PNL is determined by the actual price at which a position is closed. Therefore, when the trading price differs from the mark price, unrealized PNL will also differ from realized PNL.

If you have questions regarding this information, please contact the TruBit Team via our chat channel or email us Here and we'll be in touch!

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