PnL (Profit and Loss)
PnL — profit and loss — is the money result of trading activity. Unrealized PnL is the paper gain or loss on positions still open, moving with every tick; realized PnL is what is actually locked in once a position closes. Net PnL further subtracts all trading costs, and is the only number that reflects reality.
What is the difference between gross and net PnL?
Gross PnL is the raw price difference between exit and entry multiplied by position size. Net PnL subtracts everything the trade actually cost: exchange fees on both entry and exit, the bid-ask spread you crossed, and slippage on each fill. For short-horizon trading the gap between the two is not a rounding error — when a scalp targets a fraction of a percent, round-trip costs can consume most or all of the gross gain. Any per-trade or per-strategy evaluation done on gross numbers is systematically flattering; decisions should be made on net PnL only.
How is PnL calculated on Binance?
For a simple spot round trip the arithmetic is: (sell price − buy price) × quantity, minus fees on both sides. Fees are charged in the asset you receive unless you pay them in the exchange's fee token, and the fee rate depends on whether each order was maker or taker. Complications accumulate quickly in practice: buying the same coin at several prices requires a cost-basis method (such as average cost) to state PnL per position, and quoting profits in USDT versus BTC can flip a result from positive to negative depending on what the quote asset itself did meanwhile.
What is unrealized PnL and why does it matter?
Unrealized PnL is the mark-to-market value of open positions: what you would make or lose if you closed right now at current prices. It matters because it is psychologically loud — a large paper gain invites premature profit-taking, a large paper loss invites stop-widening and hope. Neither is money until the position closes, and in thin markets the act of closing a large position can itself move the price, so the realized number lands below the paper one. Disciplined traders define in advance the exact conditions under which paper PnL becomes realized PnL, and let the rules do the converting.
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