PnL means profit and loss. Traders use it to describe the financial result of a position, a day, or an account. It is one of the first numbers people look at, and one of the easiest to misunderstand when it is separated from risk and process.

Realised versus unrealised PnL

Realised PnL is the result after you close a position. If you buy, later sell, and account for relevant fees, the gain or loss is realised.

Unrealised PnL is the current gain or loss on an open position. It is sometimes called paper PnL because it can change until the trade is closed. A large unrealised gain is not the same as a completed result, and a temporary unrealised loss is not automatically a reason to abandon a valid plan.

A simple example

Suppose you buy 10 shares at $100 and sell them at $105. Before fees, the gross realised PnL is $50. If you bought at $100 and the current market price is $105 but have not sold, the $50 is unrealised.

The arithmetic can become more complex with futures, options, forex, leverage, commissions, funding costs, or multiple entries. The underlying question is the same: what did the position gain or lose after costs?

Why percentages and risk matter too

Dollar PnL alone can be misleading. A $100 gain may be excellent for a small, controlled risk or poor for a trade that exposed the account to a much larger potential loss. Compare the result with:

  • planned risk;
  • account size;
  • position size;
  • the stop and target defined before entry; and
  • whether the trade followed the plan.

This is why traders often track R-multiples, win rate, average win, average loss, and expectancy alongside PnL. See our guides to risk-reward ratio and trading expectancy for the next layer of analysis.

Do not let PnL grade the trade by itself

A profitable trade can be a poor decision if it broke a risk rule and happened to work. A losing trade can be well executed if it followed a repeatable setup with defined risk. PnL matters, but it is an outcome, not a complete performance review.

PnL App uses the familiar term while adding the information behind it: the plan, entry, exit, risk, and decision context. That makes the number more useful when you review a week of trades instead of reacting to one.

This article is educational and not financial or investment advice.