Breaking Down Your Unrealized P&L: Why Fees Turn Profits Into Losses

If you’ve ever closed a trading position and found your final P&L negative despite having positive unrealized gains, you’re not alone. This confusion stems from a fundamental misunderstanding about how different P&L calculations work. The key to solving this puzzle lies in understanding that your unrealized P&L is just a starting point—what ultimately matters is your closed P&L, which accounts for all the fees and costs you incurred during the entire trading journey.

The Three Layers of Trading P&L and How They Differ

When managing your trading positions, you’ll encounter three distinct P&L measurements, each telling a different part of your financial story. Understanding the relationship between these metrics—particularly how unrealized P&L differs from your final closed result—is essential for accurate profit tracking.

Position P&L represents the raw price movement profit or loss before any costs are considered. This is the theoretical gain based purely on the difference between your entry and exit prices.

Your unrealized P&L fluctuates in real-time as market prices move. It’s based on the platform’s Last Traded Price (LTP) and updates continuously while your position remains open. However, this figure has a critical limitation: it completely ignores the trading fees, funding fees, and closing costs you’ll eventually pay.

Realized P&L captures every penny of costs incurred while holding your position—including the fees to open, all accumulated funding fees, and anticipated closing costs. This is updated as your position evolves and provides a more honest picture than your unrealized P&L.

Closed P&L is your ultimate reality check. It shows the exact final profit or loss after your position is completely closed, reflecting every expense deducted from your position’s raw profit. This is the number that actually hits your trading account.

How Fees Eat Into Your Unrealized Gains

This is where the magic trick is revealed: the gap between positive unrealized P&L and negative closed P&L comes down to fee charges. Trading fees—whether the cost to open, adjust, or close your position—combined with funding fees (the interest-like charges paid continuously while holding perpetual contracts), can substantially diminish your final outcome.

Consider a simple comparison. Your unrealized P&L might show +0.22 USDT based purely on price movement. But once you factor in:

• Opening fees (calculated as a percentage of your position size)
• Funding fees accumulated over time
• Closing fees applied when you exit

Your actual closed P&L could easily flip into the red. The difference isn’t because the market moved against you—it’s because the cumulative cost of trading and holding exceeded your position profit.

Calculating Your Final P&L: From Position Profit to Closed P&L

The mathematical relationship is straightforward:

Closed P&L = Position P&L − Total Trading Fees − Total Funding Fees

Breaking this down further:

Total trading fees include both entry and exit fees. If you’re opening a 0.002 BTC position at a 0.055% maker rate, the fee calculation considers your position size relative to the entry price. The same calculation applies when closing. Funding fees represent the ongoing cost of holding a perpetual position and can fluctuate based on market conditions and your contract type (USDT Perpetual, Inverse Perpetual, or USDC Perpetual all calculate differently).

Your unrealized P&L ignores all of these costs, which is why it can appear profitable while your eventual closed P&L shows a loss. The realized P&L, updated continuously, gives you a real-time preview of what your closed P&L might look like. If you subtract your realized P&L from your unrealized P&L and get a negative number, that’s your signal: expect a loss when you close.

Real-World Example: From Unrealized Profit to Actual P&L

Here’s how this plays out with actual numbers:

Your position parameters:

• Last Traded Price (LTP): 43,696.60 USDT
• Entry Price: 43,807.30 USDT
• Quantity: 0.002 BTC
• Unrealized P&L shown: +0.2214 USDT (positive, as expected from price movement)
• Realized P&L: −0.0339 USDT (already reflecting fees and costs)

The fee breakdown reveals why:

Opening fee: 0.048188 USDT (calculated from 0.002 ÷ 43,807.30 × 0.055%) Closing fee: 0.048074 USDT (calculated from 0.002 ÷ 43,704.00 × 0.055%) Accumulated funding fees: −0.014201 USDT (the cost of holding the position) Total fee impact: 0.096262 USDT

Your raw position profit (at 43,704.00 exit price) = 0.002 × (43,807.30 − 43,704.00) = 0.2066 USDT

After deducting all fees: Closed P&L = 0.2066 − 0.096262 − (−0.014201) = 0.1245 USDT

In this case, your final result is still positive. But if your unrealized P&L were smaller relative to your fees, you’d end up negative—even though your unrealized P&L showed a gain.

Key Considerations for Your Trading Strategy

Leverage impact: Using leverage multiplies your P&L percentage return (ROI), but it doesn’t change your absolute P&L amount. A 5x leveraged position will have the same P&L in dollar terms as a non-leveraged position—only the return percentage changes.

Estimating your closed P&L: Before closing any position, use this mental framework: subtract your realized P&L from your unrealized P&L. If the result is negative, brace yourself for a loss. If positive, you’re likely in profit territory when you close.

Fee structure considerations: The actual fees you pay depend on your account status, trading volume, and whether you’re a VIP member. These calculations assume standard fee rates, so your actual result may vary based on your specific account tier.

Understanding the interplay between unrealized P&L, realized P&L, and closed P&L transforms your ability to manage trading risk and set realistic expectations before you ever hit the close button. The lesson is simple: your unrealized P&L is a useful indicator, but it’s far from the full story.