What Is PNL in Trading: Formula & Calculation

This content is for informational and educational purposes only and does not constitute financial advice. Trading involves risk, including the possible loss of principal. Past performance does not guarantee future results. Always conduct your own research and consult a qualified financial professional before making trading decisions.

What does PNL stand for?

PNL stands for Profit and Loss. In trading, PNL refers to the net financial gain or loss on a position, calculated as the difference between your entry price and exit price multiplied by your position size. PNL exists in two forms: unrealized PNL (open position) and realized PNL (closed position).

In cryptocurrency trading (buying and selling digital assets on exchanges), PNL is the number that tells you whether you are ahead or behind on a trade. You will see it labeled on the positions panel of exchanges like Binance, Bybit, and OKX whenever you hold an open position.

This article covers trading PNL, which is position-level profit and loss. This is different from a corporate "P&L statement," which is an income statement used in accounting. The two are unrelated.

PNL is also distinct from ROI (Return on Investment). PNL tells you the absolute dollar amount you made or lost. ROI tells you what percentage return that represents relative to your invested capital. If you made $500 on a $10,000 position, your PNL is $500 and your ROI is 5%.

The two types of PNL: realized vs. unrealized

PNL exists in two states with different implications: unrealized PNL updates in real time while your position is open, and realized PNL locks in the moment you close.

What is unrealized PNL?

Unrealized PNL is the theoretical profit or loss on a position that you have not yet closed. The word "theoretical" matters here: this number exists on paper, but no money has changed hands yet.

Your exchange calculates unrealized PNL using mark to market accounting, the practice of valuing your open position at its current market price rather than your original entry price. The exchange marks your position to market continuously, so as BTC price moves from $50,000 to $52,000, your unrealized PNL updates from $0 to +$2,000 in real time.

Exchanges display this figure under different labels: Binance shows "Unrealized PNL," Bybit shows "Unrealized P&L," and some platforms use "Floating PNL" or "Open PNL." All of these mean the same thing.

A concrete example: you bought 1 BTC at $50,000. The current price is $52,000. Your unrealized PNL is +$2,000. If BTC falls back to $50,000 before you close, your unrealized PNL returns to $0. Unrealized PNL is not money in your account until you close the position.

Some exchanges calculate unrealized PNL from the mark price (a fair value estimate) rather than the last traded price. This affects liquidation calculations, but the core concept remains the same.

What is realized PNL?

Realized PNL is the actual gain or loss that locks in the moment you close a position. Unlike unrealized PNL, which fluctuates with market price, realized PNL is fixed at the instant of trade closure.

Unrealized PNL converts to realized PNL at the moment you close. Different exchanges label this figure differently. Bybit calls it "Closed PNL." The industry standard term is "realized PNL." These are synonymous. For a deeper explanation of when they can diverge, see why closed PNL shows a loss when unrealized PNL is positive.

In most jurisdictions, realized PNL creates a taxable event, while unrealized PNL does not. Tax rules vary by country and individual circumstances. Consult a qualified tax professional for guidance specific to your situation.

Continuing from the example above: you bought 1 BTC at $50,000 and sold at $53,000. Your realized PNL is +$3,000 (before fees).

Unrealized PNL vs. Realized PNL

How to calculate PNL: the formula

PNL is calculated by subtracting your entry price from your exit price and multiplying by your position size. The formula differs for long and short positions because the profitable direction is reversed.

Formula Callout Block 1: PNL Formulas

Long PNL  = (Exit Price − Entry Price) × Position Size
Short PNL = (Entry Price − Exit Price) × Position Size

Variable definitions:

• Entry Price: the price you paid (for a long) or received (for a short) when you opened the trade. Entry price is fixed at the moment of execution. For positions built in multiple tranches, exchanges display an average entry price.
• Exit Price: the price at which you closed the position.
• Position Size: the quantity of contracts, coins, or units held. Position size scales PNL from a per-unit figure to your total gain or loss. If your per-unit PNL is $500 and you hold 2 BTC, your total PNL is $1,000. On crypto perpetual futures, position size is sometimes expressed in contracts: on some exchanges, 1 contract equals $1 worth of BTC; on others, 1 contract equals 1 BTC. Check your exchange's contract specifications.

In futures trading (where traders buy and sell contracts to speculate on asset prices), tick size governs the smallest possible price movement and therefore the smallest possible PNL change per contract. This becomes relevant in the tick size sections below.

The PNL formula is the same for crypto perpetuals as for traditional stocks or forex. The difference lies in how position size is expressed and how leverage changes your effective exposure.

For long and short position mechanics, see the guide on how to go long and short with spot margin trading.

Long position PNL example

A long position is a trade where you buy an asset expecting its price to rise. PNL is positive when the exit price exceeds your entry price.

• Entry Price: $50,000
• Exit Price: $55,000
• Position Size: 1 BTC

Long PNL = ($55,000 − $50,000) × 1 = +$5,000

Gross PNL on this trade is +$5,000 before fees.

Short position PNL example

A short position is a trade where you sell (or open a sell contract) expecting the price to fall. PNL is positive when the exit price falls below your entry price.

In crypto spot markets, short selling requires borrowing assets and is not available on all platforms. In crypto perpetual futures, short positions are standard and do not require borrowing.

Profitable short:

• Entry Price: $50,000 (sell contract opened)
• Exit Price: $45,000 (bought back to close)
• Position Size: 1 BTC

Short PNL = ($50,000 − $45,000) × 1 = +$5,000

Losing short (negative PNL):

• Entry Price: $50,000
• Exit Price: $52,000 (price moved against you)
• Position Size: 1 BTC

Short PNL = ($50,000 − $52,000) × 1 = −$2,000

Negative PNL means the position moved against you. This trade closed at a loss of $2,000 before fees.

What is tick size?

Tick size is the minimum price increment by which an asset can move on a given exchange or market. For a BTC/USDT perpetual contract, tick size is $0.10, meaning the price can move from $50,000.00 to $50,000.10 but never to $50,000.05.

Tick size exists to standardize price quotation and prevent infinite price granularity. Every exchange sets tick sizes for each instrument in the contract specifications.

A "tick" refers to any single price change. "Tick size" is the minimum increment that change can be. If BTC/USDT moves from $50,000.00 to $50,000.50, that covers 5 ticks ($0.50 divided by $0.10 = 5). Prices can only move in multiples of $0.10.

Tick sizes vary by asset class and exchange. Crypto perpetuals typically carry smaller tick sizes than traditional futures contracts. The reference table below shows specific values.

Tick size vs. tick value: what's the difference?

Tick size is a price unit; tick value is a dollar unit. You cannot calculate the dollar impact on your PNL from tick size alone without also knowing the contract size.

Formula Callout Block 2: Tick Value

Tick Value = Tick Size × Contract Size

Variable definitions:

• Tick Size: the minimum price increment (e.g., $0.10 for BTC/USDT perpetual)
• Contract Size: the underlying asset quantity per contract (e.g., 1 BTC)

BTC/USDT perpetual example:

• Tick Size: $0.10
• Contract Size: 1 BTC
• Tick Value: $0.10 × 1 = $0.10 per tick per contract

Every tick movement on a 1 BTC position changes your PNL by $0.10. In traditional futures markets, tick value is sometimes called "point value," which is the same concept under a different label.

To find the tick value for any instrument, open the contract specifications panel on your exchange. Tick value connects tick size to your actual dollar PNL, which the next section demonstrates.

Tick size reference table by asset class

Tick sizes differ across asset classes and exchanges.

Crypto exchange tick sizes may change when exchanges update contract specifications. Verify current values in your exchange's contract details before trading.

How tick size affects your PNL

Tick size affects your PNL by determining the minimum dollar amount your position can gain or lose in a single price movement. Every price move on any instrument occurs in multiples of its tick size, so tick size directly controls the granularity of every PNL update you see on your dashboard.

The chain works as follows: price moves by one or more ticks, each tick is worth exactly one tick value in dollars, and your total PNL change equals tick value multiplied by the number of ticks moved multiplied by your position size. The larger your position, the greater the dollar impact of each tick.

Tick size PNL calculation: step-by-step example

Calculate PNL from tick movements on a BTC/USDT perpetual using these four steps.

Scenario: BTC/USDT perpetual, tick size $0.10, contract size 1 BTC, tick value $0.10 per tick, entry price $50,000, position size 1 BTC.

Long position:

• Step 1: Identify the tick size. BTC/USDT tick size = $0.10.
• Step 2: Calculate the tick value. $0.10 × 1 BTC = $0.10 per tick.
• Step 3: Count ticks moved. Price moves from $50,000.00 to $50,010.00 = 100 ticks ($10.00 divided by $0.10).
• Step 4: Calculate PNL. 100 ticks × $0.10 × 1 BTC = +$10.00

Reverse calculation (how many ticks to reach $100 profit):

$100 target PNL divided by $0.10 tick value divided by 1 BTC = 1,000 ticks

To earn $100 on a 1 BTC long position, price must move 1,000 ticks ($100.00) in your favor.

Short position (same scenario):

Price moves from $50,000.00 down to $49,990.00 = 100 ticks in your favor.

100 ticks × $0.10 × 1 BTC = +$10.00

Position size scaling:

With a 10 BTC position, each tick is worth $0.10 × 10 = $1.00. The same 100-tick move produces $1.00 × 100 = +$100.00.

Other factors that affect your PNL

Three factors beyond raw price movement affect your final PNL figure: leverage, trading fees, and slippage.

Leverage and PNL

Leverage allows you to control a position larger than your account balance by borrowing funds from the exchange. Leverage is made possible through margin trading, where the exchange lends you capital against your deposited collateral (called margin). For a detailed breakdown, see how leverage affects unrealized P&L.

Leverage does not change the PNL formula. It changes your effective position size, which then feeds into the formula.

Example: With 10× leverage on $1,000 margin, you control a $10,000 position. A 5% price move produces $500 PNL, which is 50% of your margin, not $50 (the unleveraged 5% equivalent). Gains and losses scale the same way.

The liquidation price is the market price at which your unrealized losses have consumed your entire margin, triggering an automatic forced closure by the exchange. As your unrealized PNL moves toward a loss equal to your margin, you approach your liquidation price. At liquidation, your position is forcibly closed and your entire margin deposit is lost.

A stop loss order automatically closes your position when price reaches a level you specify, capping your realized loss before it reaches the liquidation threshold.

Trading fees and net PNL

Gross PNL does not include trading fees; net PNL does. The exchange charges a fee when you open and when you close a position.

Formula Callout Block 3: Net PNL

Net PNL    = Gross PNL − Total Trading Fees

Total Fees = (Entry Price × Position Size × Fee Rate)
           + (Exit Price  × Position Size × Fee Rate)

Variable definitions:

• Gross PNL: PNL before fees
• Fee Rate: the trading fee as a decimal (e.g., 0.001 for 0.1%)
• Entry Price, Exit Price, Position Size: same as in the main PNL formula

Worked example:

• Entry Price: $50,000 | Exit Price: $55,000 | Position Size: 1 BTC | Fee Rate: 0.1% each way

Entry fee: $50,000 × 1 × 0.001 = $50

Exit fee: $55,000 × 1 × 0.001 = $55

Total fees: $50 + $55 = $105

Gross PNL: $5,000

Net PNL: $5,000 − $105 = $4,895

Maker fees (on limit orders) are typically lower than taker fees (on market orders). Always calculate net PNL to see your true profit.

Slippage and the bid-ask spread

The bid-ask spread is the difference between the highest price a buyer will pay (the bid) and the lowest price a seller will accept (the ask). For details on spread mechanics, see floating spreads and bid-ask price dynamics in trading.

When you execute a market order (an order that fills immediately at the best available price, which may differ slightly from the last quoted price, a difference called slippage), you buy at the ask and sell at the bid. Your effective entry and exit prices are slightly worse than the displayed price, which reduces realized PNL compared to the theoretical calculation.

How to read PNL on a crypto exchange

On Binance futures, your unrealized PNL appears in the Positions tab as a real-time USDT figure. On Bybit, the equivalent column is labeled "Unrealized P&L." On OKX, the same figure appears in the Positions section of the trading interface.

Perpetual futures contracts are derivative instruments that let you speculate on an asset's price with leverage and no expiry date. Unlike traditional futures, which expire on a fixed date, perpetual contracts continue indefinitely. Funding rates (periodic payments exchanged between long and short holders) can also modify your PNL slightly over time, though their full mechanics fall outside the scope of this article.

The connection between tick size and your dashboard is direct. Every time you see your unrealized PNL update on Binance or Bybit, that change reflects one or more tick movements. On a BTC/USDT perpetual with a $0.10 tick size and a 1 BTC position, the smallest possible PNL change is $0.10. Hold 5 BTC and the minimum update becomes $0.50.

Your Positions panel typically displays entry price, mark price, position size, unrealized PNL, and an estimated liquidation price simultaneously. Realized PNL appears in your Order History or Closed P&L tab after you close a trade.

Exchange interface layouts change over time. Verify specific panel labels against your current platform.

Frequently asked questions about PNL and tick size

What does PNL stand for?

PNL stands for Profit and Loss. In a trading context, it refers to the net gain or loss on a specific position, calculated from the difference between entry price and exit price multiplied by position size. On crypto exchanges like Binance and Bybit, PNL appears on the Positions panel next to each open trade as a real-time figure.

What is the difference between realized and unrealized PNL?

Unrealized PNL is the theoretical gain or loss on an open position, updating continuously as market price moves. Realized PNL is the locked-in result that appears when you close a position. Unrealized PNL does not affect your account balance. Realized PNL is credited or debited to your account at the moment of closure.

How do you calculate profit and loss in trading?

PNL is calculated as (Exit Price − Entry Price) × Position Size for a long position, and (Entry Price − Exit Price) × Position Size for a short position. Example: buy 1 BTC at $50,000, sell at $55,000, and your gross PNL is ($55,000 − $50,000) × 1 = +$5,000. Subtract trading fees to get net PNL.

What is a tick in trading?

A tick is a single price movement on an exchange. Tick size is the minimum increment that movement can be. On BTC/USDT perpetuals, every price change happens in $0.10 steps. A move from $50,000.00 to $50,000.50 covers 5 ticks. A tick is a fixed price unit set by the exchange, not a percentage move.

What is tick size and tick value?

Tick size is the minimum price increment an asset can move (a price unit). Tick value is the dollar amount that one tick movement is worth for a given contract (a dollar unit). Tick Value = Tick Size × Contract Size. For BTC/USDT perpetual at $0.10 tick size with 1 BTC contract size, tick value is $0.10 per tick.

How does tick size affect profit?

Tick size sets the minimum dollar amount your position can gain or lose from a single price movement. Each tick is worth exactly one tick value. On a 1 BTC BTC/USDT perpetual position at $0.10 tick value, every tick moves your PNL by $0.10. Holding 10 BTC makes every tick worth $1.00. Position size determines how much each tick matters in dollar terms.

What is mark to market PNL?

Mark to market PNL refers to valuing your open position at its current market price rather than its original entry price. Your exchange performs this calculation continuously, which is why your unrealized PNL changes every second as price moves. In accounting, mark to market has a broader regulatory meaning (FAS 157 in US GAAP), but in a trading context it simply means your position is repriced at the live market rate.

Does PNL include fees?

Gross PNL does not include trading fees. Net PNL does. The "Unrealized PNL" figure on most exchanges is gross PNL and does not deduct the fees you will pay when you close. To calculate net PNL: subtract entry fees and exit fees from your gross figure using the formula Net PNL = Gross PNL − (Entry Price × Position Size × Fee Rate) − (Exit Price × Position Size × Fee Rate).

What is the PNL formula for futures?

The PNL formula for a long futures position is (Exit Price − Entry Price) × Position Size. For a short position, it is (Entry Price − Exit Price) × Position Size. These formulas apply to both traditional futures and crypto perpetual futures. In futures, position size is expressed in contracts, and leverage changes your effective position size without altering the formula itself.

Is unrealized PNL taxable?

In most jurisdictions, unrealized PNL is not taxable because no transaction has occurred. Tax liability typically begins when you close a position and realize a gain. Tax rules vary by country and change frequently, and some jurisdictions treat derivative instruments differently. Consult a qualified tax professional for guidance specific to your location and trading activity.

What happens to PNL when you get liquidated?

At liquidation, your position is forcibly closed by the exchange and your entire margin deposit is lost. This is the worst-case PNL outcome on a leveraged trade. A stop loss order placed before you reach your liquidation price converts the unlimited loss potential of an open leveraged position into a capped realized loss.

How does leverage affect PNL?

Leverage multiplies both gains and losses by increasing your effective position size. With 10× leverage on $1,000 margin, you control a $10,000 position. A 5% price move produces $500 PNL (50% of your margin) rather than $50 (the unleveraged result). The PNL formula itself does not change. What changes is the position size input, which leverage makes larger.

Is PNL the same as ROI?

PNL and ROI measure different things. PNL is the absolute dollar gain or loss on a position. ROI is the percentage return relative to your invested capital. If your PNL is $500 on a $10,000 position, your ROI is 5%. On leveraged trades, ROI is sometimes calculated on the margin deposited rather than the full notional position value, which produces a larger percentage figure.

Related reading

The following external resources provide additional platform-specific guidance on the topics covered in this article.

• Why Closed PNL shows a loss when unrealized PNL is positive
• How leverage affects your unrealized P&L
• Floating spreads and bid-ask price dynamics in trading
• How to go long and short with spot margin trading