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Introduction
In the fast-moving world of crypto and derivatives trading, unrealized PnL (Profit and Loss) plays a critical role in portfolio performance and risk management. Traders dealing in perpetual futures contracts must constantly monitor their unrealized PnL to make timely decisions, adjust positions, and avoid liquidation.
This article provides a comprehensive explainer on unrealized PnL implications for perpetual futures, including how to calculate it, why it matters, strategies for managing it, and common pitfalls. We’ll also compare unrealized and realized PnL, dive into advanced techniques, and answer frequently asked questions for both beginners and professional traders.
What Is Unrealized PnL in Perpetual Futures?
Unrealized PnL refers to the profit or loss on open positions that has not yet been closed or settled. It represents the difference between the entry price and the current market price, multiplied by the position size.
- Positive Unrealized PnL: The position is currently in profit but not yet locked in.
- Negative Unrealized PnL: The position is in a loss but has not yet been realized.
In perpetual futures, unrealized PnL is dynamic, constantly fluctuating with market price changes.
Formula Example:
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Unrealized PnL = (Current Price – Entry Price) × Position Size
This highlights what is unrealized PnL in perpe