Unrealised PnL

What is Unrealised PnL in forex and CFD trading

Unrealised PnL (Profit and Loss) is the instantaneous, fluctuating profit or loss generated by an open trading position, calculated based on the difference between the position’s Entry Price and the current market price. Unrealised PnL is provisional and has not yet been credited to or deducted from the Account Balance, meaning it only exists as a floating value. It matters for real trading decisions because it directly impacts the account’s Equity and, consequently, the Margin Level, determining the trader’s ability to hold the position or open new trades. A trader can verify or measure Unrealised PnL in the Trade or Positions tab of their platform, where it is displayed in real-time next to each open order.

Key facts about Unrealised PnL

• Definition: The theoretical profit or loss on an open position that becomes real only upon closing the trade.
• Calculation for Long Position: (Current Bid Price – Entry Price) × Position Size × Pip Value.
• Calculation for Short Position: (Entry Price – Current Ask Price) × Position Size × Pip Value.
• Status: It is a floating or paper PnL, subject to change with every market movement.
• Impact on Equity: Unrealised PnL is the component that causes Equity to differ from the Account Balance. Equity = Account Balance + Unrealised PnL
• Taxation Status: Generally not subject to tax until it becomes Realised PnL by closing the trade, depending on local jurisdiction.

How Unrealised PnL works in forex and CFD trading

The Unrealised PnL mechanism is central to the operation of leveraged CFD and forex accounts, providing the constant feedback loop between market movement and account status.

Calculation follows these steps for a long EUR/USD position:

1. Determine Price Difference: Calculate the difference between the current Bid Price and the Entry Price.
2. Convert Difference to Pips: Divide the price difference by the instrument’s Pip Size.
3. Calculate Value: Multiply the Pip Difference by the Pip Value (which depends on the Position Size and account currency).
4. Continuous Update: This value is continuously calculated in real-time using the live streaming quotes provided by the liquidity provider or market maker.
5. Equity Adjustment: The resulting Unrealised PnL is instantly added to or subtracted from the Account Balance to update the Equity figure, which is then used for Margin Level calculation. This value has no immediate cash effect.

Example of Unrealised PnL with a real trade

A trader opens a Long EUR/USD position, Position Size: 1 standard lot (100,000 units), where Pip Value is $10 per pip.

Scenario 1: Unrealised Profit

Entry: 1.1000 (Ask Price) Current Bid Price: 1.1025 Difference: 1.1025 – 1.1000 = 0.0025 (25 pips) Unrealised PnL = 25 pips × $10/pip = +$250

Scenario 2: Unrealised Loss

Entry: 1.1000 (Ask Price) Current Bid Price: 1.0990 Difference: 1.0990 – 1.1000 = -0.0010 (-10 pips) Unrealised PnL = -10 pips × $10/pip = -$100

Result: In Scenario 1, the Unrealised PnL is +$250, meaning Equity is $250 higher than the Account Balance. In Scenario 2, the Unrealised PnL is -$100.

How Unrealised PnL affects your cost and risk

Unrealised PnL does not directly affect trading cost, as costs like commission and spread are typically settled when opening or closing. However, it is the primary factor affecting real-time risk through its influence on Margin Level.

Unrealised PnL compared with related concepts

Unrealised PnL vs Realised PnL

Unrealised PnL is the theoretical gain or loss on a position that is currently open, constantly fluctuating with market prices, whereas Realised PnL is the fixed, actual profit or loss locked in upon closing a position and immediately credited to the Account Balance.

Unrealised PnL vs Equity

Unrealised PnL is the variable component that is added to the Account Balance, while Equity is the final, total sum representing the true, current worth of the account. Equity is the result of the Unrealised PnL calculation, not the calculation itself.

Broker differences in Unrealised PnL across the industry

Differences in Unrealised PnL are mainly procedural, related to the precision of the calculation, which is tied to execution latency. To explore other trading terms, visit our forex glossary.

How to verify Unrealised PnL on your trading platform

The Unrealised PnL is constantly available in the account summary and position list.

• Launch MetaTrader 5 (MT5): Open the application where you have live trades.
• Access the Trade Terminal: Use Ctrl+T or select the View > Terminal menu option.
• Navigate to the Trade Tab: This tab lists all currently open positions.
• Locate the Profit Column: Each open position will have a corresponding dollar/base currency amount listed under the Profit column. This is the Unrealised PnL for that specific trade.
• Check the Equity Total: Below the list of open trades, the Equity value reflects the Account Balance plus the total Unrealised PnL of all positions.
• Verify cTrader View: In cTrader, the Unrealised PnL is found under the Positions list, with a total sum displayed in the Account Summary panel labeled as “Floating P/L.”
• Sanity check: If the market price is moving towards your position (e.g., higher for a long trade), the Unrealised PnL amount should be increasing.