Understanding Realized P&L: Why Your Trading Profits Don't Match Your Expectations

When you close a trading position, you often face a puzzling situation: your unrealized profit looked positive, but your closed P&L shows a loss. This confusion stems from a fundamental aspect of trading that many overlook—the cumulative impact of fees. To truly understand your trading outcomes, you need to grasp the differences between three types of P&L measurements and how costs directly affect your actual profitability.

The Fee Effect: How Trading and Funding Costs Impact Your Bottom Line

The gap between what your position appears to be worth and what you actually gain or lose when closing it comes down to one critical factor: fees. Every position carries two types of costs that erode your profits. Trading fees are charged when you open and close a position, while funding fees accumulate continuously if you’re holding a perpetual contract overnight. These costs are invisible in your unrealized P&L but become very real once you settle your trade.

Consider this scenario: you’re looking at an unrealized gain that seems substantial, yet your realized P&L appears much smaller. The difference isn’t a calculation error—it’s the accumulated fees working against you. Understanding realized P&L means recognizing that this metric includes all costs from the moment you opened your position through every moment you held it, giving you the true picture of what your position has actually cost or earned you.

Unrealized P&L: Your Real-Time Position Value (Before Costs)

Your unrealized P&L is a snapshot of your position’s current profitability based on the Last Traded Price (LTP). It updates in real-time as market prices fluctuate. However, this figure is deliberately incomplete—it serves as a quick estimate rather than a final verdict on your trading performance.

The unrealized P&L calculation ignores all fees. Whether you’ve paid trading fees to enter the position, accumulated funding fees overnight, or will eventually pay fees to exit, none of these are factored into the unrealized number. This makes sense for a quick reference, but it also explains why this rosy figure doesn’t match your actual cash impact when you close out.

Key characteristics of unrealized P&L:

• Updates in real-time as the Last Traded Price changes
• Excludes all trading fees, funding fees, and closing costs
• Serves as an estimate, not your final outcome
• Calculated based on current market price versus your entry price

Realized P&L: Capturing Actual Gains and Losses (Including All Fees)

This is where realized P&L enters the picture—and it’s the metric that tells you what’s actually happening to your account. Realized P&L represents your true cash movement arising from your position, including every cost associated with holding and managing it.

Realized P&L captures several components that unrealized P&L ignores:

• Your actual profit or loss from the price difference
• Fees paid to open your position
• All funding fees accumulated while holding
• Fees paid for any partial closures
• Any realized gains or losses if you’ve already closed part of your position

Unlike unrealized P&L, which fluctuates with every price tick, realized P&L updates only when you actually settle a trade or when new fees are charged. It provides a running total of your true financial performance on that specific position. When you fully close the position, realized P&L resets to zero, and your final outcome transfers to closed P&L.

Think of it this way: unrealized P&L is what the market shows you; realized P&L is what your wallet actually experiences.

Closed P&L: Your Final Account Impact After Position Closure

Once you’ve fully closed your position, your closed P&L becomes the permanent record of your outcome. This is the ultimate number that matters—it represents the final cash impact after accounting for every single cost associated with that trade.

Closed P&L appears in two formats depending on what you’re reviewing:

Closed Orders show you the realized P&L from each individual closed transaction. If you exited your position gradually across multiple orders, each closure displays its proportionate fees and P&L contribution. This granular view helps you understand exactly when and how you generated profits or losses.

Closed Positions provide a comprehensive summary of your entire round-trip trade. This shows your average entry price, average exit price, total quantity, and the net P&L after all costs. This is the complete picture of what that specific position ultimately meant for your account balance.

The calculation for closed P&L follows this logic:

• Start with your position profit/loss (based on entry and exit prices)
• Subtract all trading fees paid to enter and exit
• Subtract or add all funding fees (depending on whether they were charges or rebates)
• The result is your actual closed P&L

Side-by-Side Comparison: How the Three Metrics Differ

To clarify these three P&L types, here’s how they differ in what they measure and when they update:

This table reveals the essential truth: unrealized P&L is the starting point, but it tells you nothing about costs. Realized P&L brings fees into the picture, showing you what’s actually happening. Closed P&L is the final verdict—what you actually made or lost.

Fee Breakdown: How Trading Costs and Funding Fees Erode Your Profits

To concretely understand how fees create the gap between unrealized and closed P&L, let’s examine what fees actually cost you:

Trading Fees are charged when you open a position and again when you close it. These are calculated as a small percentage of your transaction value, typically ranging from 0.02% to 0.10% depending on your account status and the trading platform’s fee structure. For large positions or frequent traders, these costs become substantial.

Funding Fees apply specifically to perpetual contracts and swap positions. These fees reflect the difference between the perpetual price and the spot price. Depending on market conditions, you either pay these fees (a cost to your account) or receive them (a benefit). They accumulate continuously as long as you hold the position, making them a significant factor in your realized P&L calculation.

When you add these two cost categories together, they frequently exceed the unrealized profit that seemed so attractive before you closed the position.

Real-World Example: Calculating Your Actual P&L

To make this concrete, let’s work through an actual scenario:

Setup:

• Last Traded Price (LTP): $43,696.60
• Your Entry Price: $43,807.30
• Position Size: 0.002 BTC

Unrealized P&L Calculation: Your unrealized profit appears to be +0.2214 USDT. This looks good at first glance—a positive number.

However, when you look deeper:

Realized P&L Calculation includes all fees: Your realized P&L shows -0.0339 USDT, already accounting for:

• Trading fee to open: 0.04818803 USDT
• All accumulated funding fees: -0.01420107 USDT
• Estimated trading fee to close: 0.04807440 USDT

Total fees deducted: 0.09626243 USDT

Closed P&L Calculation (the final result): When you actually close this position:

• Average Exit Price: $43,704.00
• Average Entry Price: $43,807.30
• Position P&L (entry vs exit): 0.2066 USDT
• Minus total fees: 0.09626243 USDT
• Plus/minus final funding fees: -0.01420107 USDT
• Final Closed P&L: +0.12453864 USDT

In this example, your unrealized profit of 0.2214 USDT gets reduced to 0.1245 USDT after fees—a loss of about 44% to costs. This is why realized P&L matters so much; it’s telling you the true story before you actually close.

Predicting Your Closed P&L Before You Close the Position

Understanding realized P&L gives you a powerful prediction tool. Before closing your position, you can estimate what your closed P&L will likely be by comparing your unrealized and realized P&L figures.

If your unrealized P&L minus your realized P&L equals a negative number, you can expect your closed P&L to be negative. This simple calculation reveals whether the fees you’ve already paid and accumulated funding fees are consuming more than your position’s paper profit.

For example, if your unrealized P&L is +0.25 USDT but your realized P&L is -0.05 USDT (showing accumulated costs), your rough closed P&L would be approximately 0.25 - 0.05 = +0.20 USDT. While not exact (because exit fees aren’t fully known until you close), this gives you a realistic preview of your outcome.

This forecast tool helps you make smarter closing decisions. You can see whether it’s worth exiting now or if you should wait for better prices to overcome the cost burden you’ve already accumulated.

The Bottom Line: From Unrealized to Realized to Closed

Your journey through these three P&L types mirrors your position’s lifecycle. Unrealized P&L is your entry point—it shows opportunity and potential. Realized P&L is your mid-journey checkpoint—it reveals whether fees and accumulated costs are working with or against you. Closed P&L is your final destination—the actual cash impact recorded on your account.

The reason your unrealized profit can disappear into a closed loss isn’t a mystery or platform error. It’s the predictable result of trading costs accumulating along the way. By understanding realized P&L and how it bridges the gap between your estimated profits and your actual results, you transform from a trader confused by contradictory numbers into one who sees the complete financial picture of every trade.