PnL, or Profit and Loss, measures the financial outcome of a trading position or portfolio. It can be realised (from closed positions) or unrealised (from open positions). Positive PnL indicates gains, while negative PnL reflects losses. Tracking PnL is essential for evaluating performance, managing risk, and determining tax obligations. Traders often review their PnL in real time to make timely decisions on scaling in or out of trades. Accurate PnL reporting considers factors like fees, slippage, and currency conversions. It’s a core metric in trading dashboards and a key determinant of a trader’s overall success.
Example:
A trader reviews daily PnL to evaluate whether trading strategies are performing effectively.
