In this lesson, we explain what Unrealized P/L and Floating P/L are.

When trading, there are actually two different types of “profit or loss”, also known as “P/L”.

Both are important. Let’s discuss the difference between the two.

Unrealized P/L

Unrealized P/L refers to the profit or loss held in your current open positions….your currently active trades.

This is equal to the profit or loss that would be “realized” if all your open positions were closed immediately.

Unrealized P/L is also known as “Floating P/L” because the value is constantly changing since your positions are still open.

Your unrealized P/L continuously fluctuates (or “floats”) with the current market prices if you have open positions.

For example, if you currently have an unrealized profit, if price move against you, the unrealized profit can become an unrealized loss.

Example: Floating Loss

Let’s say your account is in USD and you are currently long 10,000 units EUR/USD, which was bought at 1.15000.

The current exchange rate for EUR/USD is 1.13000.

Let’s calculate the position’s Floating P/L:

Floating P/L = Position Size x (Current Price - Entry Price) Floating P/L = 10,000 x (1.13000 - 1.15000) -200 = 10,000 x (- 0.0200) 

The position is down 200 pips.

Since you’re trading a mini lot, each pip is worth $1.

So you currently have a Floating Loss of $200 (200 pips x $1).

Floating Loss Example

It is a Floating Loss because you have NOT closed the trade yet.

Usually, when a loss remains floating, you are hoping that the price will turn around.

If EUR/USD rose above your original entry price to 1.16000, then you would now have a Floating Profit.

The position is now up 100 pips.

Since you’re trading a mini lot, each pip is worth $1.

So you currently have a Floating Profit of $100 (100 pips x $1).

Floating Profit Example