Realized P&L is the final, actual profit or loss from a trade after it has been closed. Unlike unrealized P&L (which fluctuates with price), realized P&L is permanent and directly adds to or subtracts from your account balance.
When P&L becomes realized:
Closing a long or short positionBeing liquidated (realized as a loss equal to your margin)Partial position close (portion of trade is realized)Formula:
Long close: Realized P&L = (Close Price − Entry Price) × Quantity − FeesShort close: Realized P&L = (Entry Price − Close Price) × Quantity − FeesExample:
Long BTC: Entry $48,000, Close $52,000, 0.1 BTC, taker fee 0.04%Gross P&L = ($52,000 − $48,000) × 0.1 = $400Fees = ($48,000 × 0.04%) + ($52,000 × 0.04%) = $19.20 + $20.80 = $40Net realized P&L = $360Tracking realized P&L matters for:
Tax reporting (in most jurisdictions, realized gains are taxable events)Prop firm challenges (drawdown is often calculated on realized + unrealized)Performance evaluation — unrealized gains look good until they don'tMost exchanges show your realized P&L history in the trade history section.