Profit and Loss (P&L) Definition

Profit and loss, or P&L, refers to the financial outcome of a trade or investment, whether realized or unrealized.

What is Profit and Loss?

Realized P&L reflects the outcome of closed positions, while unrealized P&L reflects gains or losses on open positions.

Tracking P&L is essential for evaluating trading performance over time.

A closed trade that made $200 in profit contributes $200 to realized P&L.

A pending order is an instruction to buy or sell an asset once the price reaches a specified level, rather than immediately.

A pip is the smallest standardized price movement in a currency pair, typically the fourth decimal place.

A portfolio is a collection of financial assets, such as stocks, bonds, currencies, or commodities, held by an individual or institution.