P&L

What Does P&L Mean?

P&L, or Profit and Loss, is calculated by subtracting your total cost from the current value of your assets. A positive number indicates a profit, while a negative number reflects a loss. In crypto trading, P&L is divided into two types: realized P&L and unrealized P&L.

Realized P&L refers to profits or losses that have been locked in after you sell or settle your position—essentially, results already recorded in your account. Unrealized P&L, also known as floating profit and loss, represents the potential outcome of open positions; it fluctuates as the market price changes. Understanding the distinction between the two helps you avoid mistaking "paper gains" for actual, withdrawable profits.

How Is P&L Calculated in Crypto Trading?

The most common method is to compare "quantity × current price" with the "total purchase cost," then subtract any relevant fees. For spot trading, P&L can be calculated simply by multiplying your holdings by the current market price. For derivatives, you must factor in contract value and the difference between entry and exit prices.

Spot Example: Suppose you buy 0.25 ETH on Gate for 1,000 USDT (USDT is a stablecoin pegged to the US dollar). When ETH reaches 4,200 USDT, your unrealized P&L is approximately 0.25 × 4,200 − 1,000. To get a more accurate figure, subtract both buy and sell trading fees.

Derivatives Example: If you open a long position with one ETH perpetual contract at an entry price of 3,800 and the current price is 4,000, your unrealized P&L primarily comes from the price difference (4,000 − 3,800) multiplied by the contract size. You must also deduct trading fees and any funding rates paid during the holding period for a precise calculation.

What’s the Difference Between Spot and Derivatives P&L?

Spot P&L mainly depends on the difference between your average purchase price and the current market price, with relatively simple fee structures. For derivatives, besides price differences, leverage, funding rates, and liquidation rules significantly impact P&L.

Trading spot is like buying a product outright; your profit or loss is the value difference. Derivatives are similar to "participating in price movements using margin," where a small amount of capital can amplify both gains and losses. Leverage magnifies returns but also increases risk—open positions can be liquidated if losses exceed your margin, making derivatives P&L riskier and more complex.

How Do Fees and Slippage Impact P&L?

Trading fees are direct costs incurred with each transaction and will reduce profits or deepen losses. Slippage is the discrepancy between your expected order price and the actual execution price, which becomes more pronounced during high volatility or low liquidity.

For example, in spot trading, if you intended to buy at 4,000 but due to slippage executed at 4,010, your cost increases. Adding both buy and sell fees further reduces your final P&L compared to a simple price difference calculation. The same applies to derivatives: opening and closing positions incur fees, and slippage may lead to less favorable execution prices than anticipated.

How Are Funding Rates and Interest Related to P&L?

Funding rates are periodic payments exchanged between longs and shorts in perpetual contracts, designed to keep contract prices aligned with index prices. Unlike one-time fees, funding rates are charged or credited periodically and can continuously impact your P&L.

If you hold a long position and the funding rate is positive, you'll pay funding periodically; if negative, you may receive funding. Interest expenses arise in borrowing or leveraged scenarios—such as using margin to buy spot or borrowing coins in a margin account—which add to your holding costs. Most platforms settle funding rates every eight hours (as of 2025), with real-time funding rate panels and risk limit displays available for better P&L forecasting.

How to View P&L on Gate?

You can easily check both spot and derivatives P&L on Gate via clear portfolio interfaces—ideal for beginners.

Step 1: Open the Gate trading app and navigate to "Assets" or "Spot Account" to view your holdings' details. This page typically displays unrealized P&L and entry cost for each asset.

Step 2: Go to the "Derivatives" section and check your "Positions" list to find unrealized P&L, realized P&L, average entry price, ROE (Return on Equity based on margin used), and other key metrics.

Step 3: In the contract details page, pay attention to "Funding Rate" and settlement times; prolonged exposure during high funding rates can significantly affect your overall P&L.

Step 4: Use "Order History/Trade History" to review executed prices, quantities, and fees. This helps you accurately assess real profits or losses rather than just relying on floating values.

Practical Methods for Managing P&L

The goal of P&L management is to make outcomes predictable and reviewable—not purely luck-based.

Step 1: Set stop-loss and take-profit orders. Stop-loss predefines your maximum acceptable loss; take-profit locks in gains at preset levels. Combining both helps contain P&L within manageable boundaries.

Step 2: Control position sizing. Limit each trade to a small portion of total capital—commonly, single-trade risk should not exceed 1%–2% of total funds—to avoid outsized losses from any single mistake.

Step 3: Trade in batches (also known as grid trading or dollar-cost averaging/partial exits). Splitting large orders into smaller trades reduces slippage and emotional decision-making for healthier P&L outcomes.

Step 4: Periodically review realized P&L. Weekly or monthly statistics—including fees and funding rates—help identify which strategies contribute most to performance or drawdowns.

Step 5: During periods of high volatility, consider converting profits into stablecoins (like USDT). As stablecoins are pegged to fiat currency values, this helps preserve gains with less exposure to market swings.

What Are Key Risks Affecting P&L?

P&L risks stem from price volatility, leverage usage, liquidity constraints, and settlement mechanisms. Sharp price moves can rapidly inflate or shrink unrealized P&L; leverage accelerates both gains and liquidation-triggered losses.

On illiquid assets, slippage increases the gap between planned and actual results. In extreme market conditions, funding rates can change drastically; the longer you hold positions, the bigger their impact on P&L. All capital operations carry risk—always set risk controls according to your personal tolerance level.

Common Misconceptions About P&L

Typical misconceptions include: treating unrealized (floating) P&L as actual profits; ignoring fees and slippage by only considering raw price differences; failing to include funding rates and interest in long-term holding costs; confusing asset-denominated versus fiat/stablecoin-denominated P&L; not calculating breakeven prices (where P&L = 0), leading to poor stop-loss/take-profit settings.

If you use cross margin in derivatives without stop-loss protection, your entire account becomes exposed to risks from one position—a misjudgment that can worsen drawdowns during adverse markets.

Key Takeaways on P&L

P&L is the difference between current value and invested capital—divided into realized and unrealized categories. For spot trading, focus on price difference and fees; for derivatives, also account for leverage, funding rates, and liquidation rules. Reliable P&L management requires factoring in execution price, position size, fees, slippage, and settlement cycles—double-check all details via Gate's portfolio and order history interfaces. Combine stop-loss, position sizing, batch trading strategies with periodic reviews and stablecoin conversions to integrate effective P&L management into daily habits.

FAQ

What’s the Difference Between Unrealized (Floating) and Realized P&L?

Unrealized (floating) P&L reflects changes in portfolio value while positions are still open—it’s not locked in until you close out. Realized P&L is finalized after assets are sold or settled. In simple terms: floating P&L fluctuates with market moves; realized P&L is fixed and won’t change further. Monitoring both helps prevent over-optimism or pessimism based only on paper results.

Why Doesn’t My Account Balance Match My P&L Figures?

Account balance equals initial funds ± realized P&L ± fees ± funding rates (and other costs). Displayed P&L typically shows only floating profit/loss before deducting all expenses. On Gate’s detailed account view you can review all fee records—explaining why actual balances may differ from visible P&L numbers.

What Do Risk-Reward Ratios Like 1:2 or 1:3 Mean?

A risk-reward ratio describes how much risk you take per unit of potential gain in a single trade. A ratio of 1:2 means risking $2 to earn $1; 1:3 means risking $3 for every $1 gained. Generally, higher risk-reward ratios (e.g., 1:3 vs. 1:2) are preferable because they offer better long-term profitability even if your win rate isn’t high.

Why Is There Floating (Unrealized) P&L in Spot Trading?

Floating (unrealized) P&L in spot trading represents how much your holdings have changed in value based on current market prices. For example: if you bought an asset at $1,000 and its price rises to $1,200, your floating profit is $200. Only after selling does this become realized profit.

Do Trading Fees Directly Affect My P&L?

Absolutely—trading fees are real costs deducted from your account balance that reduce your final realized profit or increase losses. For instance, if you make $100 but pay $30 in fees, your net profit is just $70. On Gate you can lower fee rates by upgrading VIP levels or using platform tokens (GT) for fee discounts—helping optimize overall P&L outcomes.