PnL in Trading: Realised Gains Count for Tax, Unrealised Ones Only on Screen

PnL stands for profit and loss. In trading, the metric shows how much money a position is currently making or costing. One distinction matters, and many displays show it only in small print: realised PnL is the result of a closed trade, while unrealised PnL is a pure paper value that changes with every price tick. Only the realised gain lands in your account, and in Germany only that gain counts for the tax office.

If you trade cryptocurrencies such as Bitcoin on an exchange, you see PnL in every position overview, often in green or red and with a percentage. This guide explains how the figure is built, which costs it often does not yet include, and how to evaluate your own trading performance honestly. Tools that do exactly that are listed in our comparison of crypto analytics platforms.

What does PnL mean in trading?

The meaning of PnL is quickly explained: PnL is the difference between the value of a position today and the price you paid on entry. The abbreviation comes from accounting, where the statement of profit and loss is also called the income statement. In trading, however, PnL almost always refers to the result of individual trades or of an entire account, not a company's annual accounts. Some platforms also write P&L or P/L; they mean the same thing.

An exchange usually shows you several PnL values side by side. Daily PnL measures the change since midnight, position PnL the change since your entry, and total PnL combines all positions and often closed trades as well. Which time span is meant is usually stated only in the small print or behind an info icon next to the figure. Read it before you draw a conclusion from a green number.

Realised vs unrealised PnL: a sale against a paper value

Unrealised PnL (also floating PnL or open profit) is the gain or loss on a position that is still open. It describes what you would get if you closed now at the current market price. If the price rises, the paper gain grows; if it falls, the gain shrinks again. At that moment you have earned nothing; you merely hold a value that fluctuates.

Realised PnL only arises when you sell or close the position. From that point the result is fixed, the fees have been deducted, and the money sits in your account as a balance. Many traders look at the unrealised value and feel rich. What counts for your bottom line, though, is what you actually take away.

A comparison helps: unrealised PnL is like the estimated value of your flat, while realised PnL is the amount that reaches your account after completion. Between the two lie the market price on the day of sale, the costs and sometimes a tax.

Also important for the account overview is equity, the capital in your account. Equity is the account balance plus the unrealised PnL of all open positions. If the open loss grows sharply, equity falls, even though the account balance still looks unchanged.

How to calculate PnL: the formula for long and short positions

The calculation is simpler than the many columns of a trading platform suggest. For a long position, where you bet on rising prices:

PnL = (current market price − entry price) × position size

For a short position, where you bet on falling prices, the signs are reversed:

PnL = (entry price − current market price) × position size

Position size is the quantity of the coin, for example 0.5 BTC, not the amount of your collateral. For futures and perpetuals, many exchanges calculate unrealised PnL not from the last traded price but from the mark price. This is a smoothed reference price drawn from several exchanges that filters out brief spikes on a single venue. That is why the PnL display sometimes differs slightly from the price you see on the chart.

You get percentage PnL by dividing the gain by the capital deployed. This is exactly where the misunderstandings begin, because capital deployed can mean the full position value or only the margin posted. More on that in the worked example.

Bitcoin worked example: how fees and funding eat into PnL

An example with round, assumed values shows how far the display and the result can drift apart. You open a long position of 0.5 BTC on a perpetual contract at $70,000. The position value is therefore $35,000. With five times leverage, you post $7,000 as margin.

Ten days later the mark price stands at $73,500. The exchange shows unrealised PnL of (73,500 − 70,000) × 0.5 = $1,750. Relative to your margin that is 25 percent, relative to the position value 5 percent. Both percentages are correct; they simply answer different questions.

Now come the costs that many displays only deduct on closing:

• Trading fee on entry: at an assumed taker fee of 0.05 percent on $35,000, that is $17.50.
• Trading fee on exit: 0.05 percent on a position value of $36,750 comes to $18.38.
• Funding: perpetuals have no expiry date. To keep their price in line with the spot market, the long and short sides pay each other a financing fee at regular intervals, every eight hours on many exchanges. At an assumed 0.01 percent per interval, that adds up to around 0.3 percent over ten days, or roughly $105.

Your realised PnL after closing is therefore around $1,609 instead of $1,750. In calm markets the difference is barely noticeable. With many small trades or high funding, it eats a large share of the profit. How the financing fee is made up in detail is explained in our guide to calculating the funding rate; the basics of the contracts are covered in our article on Bitcoin futures.

Total PnL, ROE and percentages: which metric the exchange shows

Platforms name their metrics differently. Three terms come up almost everywhere:

• Total PnL is the sum of realised and unrealised results over a period or across all positions. Whether fees and funding are included varies by provider.
• ROE (return on equity) relates PnL to the margin deployed. With leverage this figure looks large because the denominator is small.
• PnL as a percentage of position value shows how far the price itself has moved, regardless of leverage.

A single figure is not enough for an honest assessment of your strategy. More telling is a look at several metrics across many trades: hit rate, average gain per winning trade, average loss per losing trade and the ratio between the two. A strategy with a 40 percent hit rate can be profitable if the winners are clearly larger than the losers. Conversely, a high hit rate can lose money if individual losses wipe everything out.

Many traders keep a trading journal for this or use portfolio trackers that import exchange data via an API and display PnL by coin, exchange and period. Which metrics a tool should cover depends on your trading style: for day traders the analysis per trade matters, for swing traders rather the trend over weeks.

Leverage and margin: why unrealised PnL can lead to liquidation

In spot trading you buy the coin entirely with your own money. An unrealised loss hurts, but it forces you into nothing. With leveraged trading it is different. The exchange requires that your equity does not fall below the maintenance margin, the minimum amount that secures a position.

In the example above with five times leverage, a price drop of just under 20 percent is enough for the unrealised loss to have almost consumed your $7,000 margin. Long before the margin is fully used up, the exchange closes the position by force. At that moment the fluctuating paper loss becomes a realised loss, whether you like it or not. How such forced closures work and who has to top up in an extreme case is described in our article on liquidations and margin calls.

Good risk management therefore starts with unrealised PnL. A stop-loss is an order set in advance that closes a position automatically at a fixed price and limits the loss. Many traders also decide what share of their account a single trade may risk at most, often one to two percent. The position size then follows from the distance between entry and stop-loss, not from gut feeling.

What drives PnL: price, position size, costs and the exchange rate

Five factors decide how large your PnL turns out. The most important is the price move between entry and exit. Position size multiplies that move, and leverage increases the risk relative to the margin posted. Fees, spreads and funding take something off in both directions. Many overlook the fifth factor: the exchange rate.

Most crypto trading pairs are quoted against the US dollar or against stablecoins such as USDT. Your trading position can be in profit in dollars and still bring hardly any gain in euros if the dollar weakens against the euro over the same period. For tax in Germany, the gain in euros counts, converted at the rate at the time of purchase and sale. The display in the exchange app does not replace that conversion.

Better decisions follow from this distinction. If you look at PnL only in the exchange's currency, you overestimate or underestimate your result. A simple habit helps improve your own strategy: set the risk per trade before the position is opened, and recalculate PnL in euros regularly.

PnL and tax in Germany: what the tax office counts under Section 23 of the Income Tax Act

For tax purposes, only realised PnL matters. A paper gain on the screen does not trigger tax as long as you do not sell the coins or swap them into another crypto asset. If you hold cryptocurrencies as private assets, a sale produces income from private disposals under Section 23 of the German Income Tax Act (EStG). Gain or loss there is the difference between the sale price on the one hand and the acquisition costs and expenses on the other. Fees for buying and selling therefore reduce the taxable gain, just as they reduce realised PnL in the worked example.

Swapping one coin for another also counts as a sale. Anyone who swaps ether from the Ethereum network for another token therefore realises a gain or loss, even if no euros ever arrive in the account. On the question of which coins count as sold first after several purchases, the Federal Ministry of Finance allows the FIFO method in its letter on crypto assets of March 2025: the units bought first are treated as sold first.

Crypto holding period, exemption limit and loss offsetting for realised PnL

Three rules from Section 23 EStG decide whether your realised PnL costs tax:

• Holding period: if more than one year lies between purchase and sale, the gain on crypto assets held privately is tax-free. A realised gain after 13 months therefore stays untaxed, the same gain after 11 months does not.
• Exemption limit: if your total gain from all private disposals in the calendar year is below €1,000, it stays tax-free. It is an exemption limit, not an allowance. If you reach €1,000 or more, you pay tax on the whole amount, not just on the part above it.
• Loss offsetting: realised losses may only be offset against gains from private disposals, in the same year, the previous year or the following years. They cannot be set against salary or rental income.

An example with assumed figures: you buy 0.1 BTC for €6,000 including fees and sell it after five months for €7,200, less a fee of €7.20. The realised gain is €1,192.80. Because it is above the exemption limit, it is taxable in full at your personal tax rate. Had you waited seven months longer, the same gain would have been tax-free.

Futures and perpetuals can be a different story. Many tax advisers classify gains from them as forward transactions under capital income according to Section 20(2) No. 3 EStG. In that case the 25 percent flat-rate withholding tax plus the solidarity surcharge applies, and there is no holding period. The classification of crypto derivatives has not been settled in every detail. For larger amounts, have it checked by a tax adviser. So that the records are available if needed, it pays to document losses and supporting evidence properly.

Common mistakes when reading the PnL display

The most common mistake is to treat unrealised PnL as money earned. A paper gain can vanish within hours, especially in a market that swings five or ten percent in a day.

A second mistake concerns percentages. An ROE of 50 percent at ten times leverage means a price move of only 5 percent. In the opposite direction, the same move is enough to lose half the margin.

Third, many underestimate running costs. Funding, spreads and fees appear on some exchanges only in realised PnL or in a separate column. If you only look at the unrealised value, you think your strategy is better than it is.

Fourth, tax is often left out of the picture. A trader who makes €5,000 in realised gains within a year keeps noticeably less after tax. Anyone who holds the same coins for more than a year can avoid that. The result after fees and taxes is the figure against which a trading strategy has to be measured.

Fifth, many traders compare their PnL across different exchanges without checking how it is calculated. If one platform uses the mark price and the other the last traded price, or only one of them deducts funding, the figures are not comparable. A consistent export of trading data into a tool of your own solves this problem.

PnL after tax: below €1,000 of annual gains it stays tax-free

PnL is the most important figure in trading, but only the realised value after all costs tells you whether your strategy works. Here is how to put that into practice:

1. Record metrics properly: evaluate your PnL across many trades, with hit rate and the ratio of gains to losses. Suitable tools are listed in our comparison of analytics platforms.
2. Factor in tax: have your realised PnL, including holding periods and fees, calculated automatically so that your tax return is right. An overview is provided by our comparison of crypto tax software and portfolio trackers.
3. Compare fees: every trading fee and every funding payment reduces your realised PnL directly. How providers differ is shown in our crypto exchange comparison.

(As of November 7, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)