Profit and Loss
Profit and loss (PnL) is how much a position has gained or lost: realized once you sell, unrealized while you still hold.
Quick answer
Profit and loss (PnL) is how much a position has gained or lost. It is realized once you sell and unrealized while you still hold.
What it means
Realized PnL is the gain or loss locked in when you close part or all of a position. Unrealized PnL is the paper gain or loss on tokens you still hold at the current price. Combined PnL adds the two together.
Why it matters
Unrealized gains are not money you have kept until you sell. Judging performance on realized results across many trades, rather than one open position, gives a far more honest picture of skill.
What happens if you ignore this
Confuse unrealized gains for real money and you'll make real decisions on imaginary profit — spending, sizing up, or refusing to sell a winner that's quietly round-tripping. Paper gains can vanish entirely before you lock them in. Knowing realized from unrealized keeps your scoreboard honest.
How it works
Percentage return compares combined PnL to what you invested, including fees. If you sell only part of a position, the cost basis is split between the portion you sold and the portion you keep, so realized and unrealized PnL stay consistent.
Advanced explanation
Every PnL figure is measured against your cost basis. Trading fees apply on both the buy and the sell, and slippage reduces the price your exit actually fills at. On thin memecoin liquidity, slippage can be a large share of a small trade, so realized PnL is often lower than a naive entry-to-exit price difference implies.
Story
Bea's position is up 300% on screen. She tells friends she 'made' several thousand dollars and mentally spends it, holding for a 10x.
She expects to lock in that gain later, at an even higher price.
The token fades back toward her entry. Because she never sold, the 'profit' was only ever unrealized — and it disappears. Her realized PnL ends up near zero.
Unrealized PnL is a number on a screen, not money in your pocket. It only becomes real when you sell. Deciding in advance what to realize protects gains from evaporating.
Examples
Invest $1,000 at $0.02 and the price rises to $0.05. Selling half realizes profit on that portion while the rest stays unrealized until you sell it.
Beginner tips
- A green number isn't profit until you sell — that's the realized/unrealized difference.
- Judge yourself over many trades, not one screenshot-worthy winner.
- Fees and slippage make real PnL lower than entry-to-exit price suggests.
Common mistakes
- Treating unrealized PnL as money you already have. It can disappear if price reverses.
- Ignoring fees and slippage, which make real PnL lower than a simple price difference suggests.
- Judging skill from a single lucky trade instead of results across many trades.