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What Is PnL (Profit and Loss)? Perpetual Trading Explained

PnL stands for Profit and Loss, and it represents how much money you have made or lost on your trading positions. In perpetual futures trading, your PnL is displayed in real-time as the market price moves, helping you track your trading performance at a glance.

A positive PnL (shown as +$10, for example) means you're currently in profit. A negative PnL (shown as -$10) means you're currently at a loss.

Types of PnL​

There are two main types of PnL you'll encounter when trading:

Unrealized PnL (Floating PnL)​

Unrealized PnL is your current profit or loss on an open position. It's called "unrealized" because you haven't closed the trade yet, so the profit or loss isn't locked in.

Key characteristics:

  • Changes constantly as the market price moves
  • Not yet added to or subtracted from your account balance
  • Can turn from profit to loss (or vice versa) until you close the position

Realized PnL​

Realized PnL is your final profit or loss after you close a position. Once realized, this amount is added to (profit) or subtracted from (loss) your account balance.

Key characteristics:

  • Locked in and unchangeable
  • Immediately affects your account balance
  • Includes trading fees and funding rate payments

How to Calculate PnL​

For Long Positions​

When you go long, you profit when the price goes up:

PnL = (Current Price - Entry Price) × Position Size

Example:

  • Entry Price: $50,000
  • Current Price: $52,000
  • Position Size: 0.1 BTC (worth $5,000 at entry)
  • PnL = ($52,000 - $50,000) × 0.1 = +$200

For Short Positions​

When you go short, you profit when the price goes down:

PnL = (Entry Price - Current Price) × Position Size

Example:

  • Entry Price: $50,000
  • Current Price: $48,000
  • Position Size: 0.1 BTC (worth $5,000 at entry)
  • PnL = ($50,000 - $48,000) × 0.1 = +$200

PnL with Leverage​

Leverage amplifies your PnL relative to your margin (the capital you put up):

PnL Percentage = Price Change % × Leverage

Example with 10x leverage:

  • You deposit $1,000 margin
  • You open a $10,000 long position (10x leverage)
  • BTC rises 5%
  • Your PnL = 5% × 10 = 50% = $500 profit

However, leverage works both ways:

  • If BTC dropped 5% instead, your loss would be $500 (50% of your margin)

What Affects Your PnL?​

Several factors impact your total PnL beyond just price movement:

1. Price Movement​

The primary driver of PnL - how much the market moves in your favor or against you.

2. Position Size​

Larger positions mean larger absolute PnL for the same percentage price move.

3. Leverage​

Higher leverage means higher percentage returns (and losses) on your margin.

4. Funding Rate Payments​

Funding rates are added to or subtracted from your PnL over time. High funding costs can significantly reduce profits on longer-term positions.

5. Trading Fees​

Opening and closing fees reduce your final realized PnL.

Practical Example: Complete Trade​

Let's walk through a complete trade and calculate the final PnL:

Opening the Position:

  • You deposit $1,000 to your perp balance
  • You open a 5x long BTC position at $50,000
  • Position size: $5,000 (worth 0.1 BTC)
  • Opening fee: $2.50 (0.05% of position)

During the Trade:

  • BTC rises to $52,500 (5% increase)
  • Unrealized PnL: ($52,500 - $50,000) × 0.1 = +$250
  • Funding payments over 24 hours: -$5 (you paid shorts)

Closing the Position:

  • You close at $52,500
  • Closing fee: $2.63 (0.05% of position)

Final Realized PnL:

  • Price PnL: +$250
  • Funding: -$5
  • Opening fee: -$2.50
  • Closing fee: -$2.63
  • Total Realized PnL: +$239.87

Your return on margin: $239.87 / $1,000 = 23.99%

Tips for Managing Your PnL​

  1. Set Take Profit (TP): Lock in profits at your target price
  2. Use Stop Loss (TL): Limit your maximum loss before liquidation
  3. Factor in fees and funding: Include all costs when calculating your break-even point
  4. Don't let winners become losers: Consider trailing stops to protect unrealized profits
  5. Track your performance: Keep a trading journal to analyze your winning and losing trades

Understanding PnL connects to these concepts:

Learn how to maximize your profits by reading our common trading mistakes.