โโก What is PnL and how many types are there? ๐๐
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โCommunity, every time we open a Spot or Futures position, Binance shows us a green or red number accompanied by the letters PnL.
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โKnowing how to read this metric is vital so you donโt confuse โpaper profitsโ with real money in your pocket.
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โ๐ก What is PnL?
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โPnL stands for Profit and Loss. It shows how much youโre gaining or losing on a trade over a given period of time.
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โ๐ Types of PnL you should know:
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โ1๏ธโฃ Unrealized PnL โณ
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โWhat is it? The theoretical profit or loss ๐ of an OPEN position.
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โExample: You buy 1 BTC at $60,000 and the price rises to $65,000. Your Unrealized PnL shows +$5,000 (in green), but it isnโt your money yet. If the price drops back to $58,000 before you close the position, that profit disappears.
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โโPaper profits canโt be spent until you press the close button.โ
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โ2๏ธโฃ Realized PnL ๐ฐ
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โWhat is it? The profit or loss from a CLOSED position.
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โExample: Continuing with the previous example, you sell at $65,000 and close the trade. That +$5,000 (minus fees) is added to your wallet balance.
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โImportant note: Realized PnL also deducts funding fees and trading fees.
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โ3๏ธโฃ Daily / Cumulative PnL ๐
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โThis is an overall summary of your performance over a period of time (24 hours, 7 days, 30 days, etc.). It helps you assess whether your trading strategy is consistently profitable.
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โ๐ก Tip
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โDonโt celebrate or worry about Unrealized PnL too soon. Set your exit targets from the start and stick to your plan with discipline. โก๐ฏ
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โ๐ญ Tell me
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โDo you usually close your trades when you reach your target, or have you ever let a green PnL run only for it to turn red because you didnโt lock in your profits? Let me know! ๐
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