What is PNL in Crypto? Difference Between Realized PNL and Unrealized PNL
- rachelbeautybar
- Aug 12
- 2 min read
1. What Does PNL Mean in Crypto?
PNL (Profit and Loss) measures the difference between your entry value and the current or exit value of your investment.
Example:
Buy 1 BTC at $100,000 → Price rises to $105,000 → PNL = +$5,000 profit
Buy 1 BTC at $100,000 → Price drops to $98,000 → PNL = -$2,000 loss
In crypto, where volatility is extreme, PNL tracking helps traders decide when to take profit or cut losses before market conditions change dramatically.
2. Realized PNL vs Unrealized PNL
PNL comes in two forms:
A. Realized PNL – Profit/Loss From Closed Trades
Definition: The gain or loss from trades you have already closed.
Example (Profit): Buy ETH at $1,000 → Sell at $1,500 → Realized PNL = +$500
Example (Loss): Buy ETH at $1,000 → Sell at $800 → Realized PNL = -$200
Key Insight: Realized PNL is “locked in”—once you sell, it becomes actual profit or loss in your account.
B. Unrealized PNL – Profit/Loss From Open Positions
Definition: The potential gain or loss from positions you still hold, based on current market price.
Example (Profit): Buy BTC at $100,000 → Current price = $105,000 → Unrealized PNL = +$5,000
Example (Loss): Buy BTC at $100,000 → Current price = $98,000 → Unrealized PNL = -$2,000
Key Insight: Unrealized PNL changes constantly as market prices fluctuate. It turns into Realized PNL only when you close the position.
3. Why PNL Matters in Crypto Trading
Evaluate Investment Performance
Positive PNL means your strategy is working.
Negative PNL signals a need for adjustment.
Decide When to Take Profit or Cut Losses
Many traders set target PNL percentages to secure profits.
Stop-loss orders can help limit downside risk.
Risk Management
Regular PNL tracking ensures you don’t overexpose yourself to bad trades.
Futures & Margin Trading
In Perpetual Futures and Margin markets, PNL is vital for avoiding liquidation.
Traders monitor Unrealized PNL for open positions and Realized PNL for closed ones to stay in control.
4. Quick Formula to Calculate PNL in Crypto
Spot Trading: PNL = (Sell Price – Buy Price) × Quantity
Futures Trading (With Leverage): PNL = (Exit Price – Entry Price) × Position Size × Leverage
(Positive = Profit, Negative = Loss)
5. Pro Tips for Managing PNL
Track Both Types: Always monitor both realized and unrealized PNL for a full performance picture.
Avoid Emotional Trading: Don’t let temporary unrealized gains or losses cloud your judgment.
Set Rules: Decide your profit target and maximum loss threshold before entering trades.
Use Tools: Many exchanges like Binance, OKX, and Bybit offer built-in PNL tracking dashboards.
Conclusion
Understanding PNL in crypto—both Realized and Unrealized—is a must-have skill for traders aiming to survive and thrive in volatile markets. By tracking these metrics, you can make informed decisions, manage risk, and improve your long-term profitability.
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