Realized PnL (Profit and Loss) is the actual profit or loss from a trade that has been closed. Unlike unrealized PnL, which fluctuates with market price while a position is open, realized PnL is final and permanent once the position is closed.
Calculation
Long Position: Realized PnL = (Exit Price - Entry Price) × Position Size - Fees
Short Position: Realized PnL = (Entry Price - Exit Price) × Position Size - Fees
Example:
- Buy 1 BTC at $50,000
- Sell 1 BTC at $53,000
- Fees: $50 total
- Realized PnL = ($53,000 - $50,000) × 1 - $50 = $2,950
Tax Implications
Realized PnL is taxable in most jurisdictions. Unrealized PnL is not. This is why some traders prefer to hold winning positions (unrealized gains) while realizing losses for tax benefits.