P&L

Profit & Loss (P/L) is a financial report that provides a summary of the profit or loss of a portfolio for a specified period of time. For example, Mr. A summarizes his overall end-of-day portfolio with a P&L of +100$, while Mr. B summarizes his overall end-of-day portfolio with a P&L of -10$.

P&L can be retrieved from days to months or sometimes to years or even many years. This depends on how far back the broker/platform can be viewed.

P&L can be divided into two types:

1. Unrealized P&L is the profit or loss of currently open trading positions. This is not considered a real profit or loss until the position is closed.
2. Realized P&L is the profit or loss from trading after the position is closed. This is real profit or loss which includes the calculation of any commissions or fees associated with the transaction.

For example, Mr. Antony opened a position 1 Lot size Buy on GBP/USD at 1.36118 (Open Price). The current price (Market Price) is 1.36417. A few moments later,Mr. Antony closes a Buy position at 1.36350 (Closed Price). for a trading commission is 7$/Lot and the spread is 0.6 pips.

How much the profit. /loss can we calculate in this case?

1. Unrealized P&L = (Market Price – Open Price) x Lot = (1.36417 – 1.36118) x 1 = +299$
2. Realized P&L = [(Closed Price – Open Price) x Lot] – [(Commission x Lot) + (Spread x Lot)] = [(1.33650 – 1.36118) x 1] – [(7 x 1) + (6 x 1) ] = +219$