There are many different ways to calculate realized and unrealized profit and loss (P&L). For any one position the difference between unrealized and realized P&L is straightforward as long as the position is either open or fully closed. After the position is opened, and for as long as the position stays open, the P&L is unrealized.

Unrealized P&L is a function of the *Mark Price* and the *Average Entry Price*:

`Unrealized P&L = `

`Position Size x (Mark Price - Average Entry Price)`

When the position is closed in full, the P&L becomes realized:

`Realized P&L =`

` Position Size x (Average Exit Price - Average Entry Price)`

When an open position is partially closed, however, there are many (valid) ways to calculate realized P&L on the part of the position that was closed, and unrealized P&L on the part of the position that is still open.

## How EQONEX Calculates P&L

EQONEX BTC Perpetual Futures are USDC denominated, therefore any P&L is settled in USDC. P&L on *open *EQONEX BTC Perpetual Futures positions is always unrealized. To calculate realized and unrealized P&L we use the concept of Average Cost. Average Cost is the average price of opening the position and any subsequent filled orders that increased the position size. It does not take into account any filled orders that reduce the position size.

`Average Cost`

` = Average Price of opening the position and any subsequent filled orders that increase the position size`

You can find the Average Cost for your open positions on the positions tab on the trading page on EQONEX.

The Average Exit Price is the average price of the filled orders that (partially) close the position. We define unrealized and realized P&L as follows:

`Unrealized P&L `

`= Open Position Size x (Mark Price - Average Cost)`

`Realized P&L `

`= Closed Position Size x (Average Exit Price - Average Cost)`

Both realized and unrealized P&L can be found on the positions tab on the trading page. For EQONEX Perpetual Futures, Unrealized P&L is shown under the Value (USD) column. There is no P&L reported on Spot trades.

Unrealized P&L is reflected in your Total Account Margin and therefore can increase or decrease your trading capacity at EQONEX, but it cannot be withdrawn from the platform. You can realize and withdraw P&L by closing your position.

Any Basis Payments paid or received over the life of the trade as well as any fees paid are settled directly in your account and do not contribute to realized P&L.

**Examples**

To illustrate the concepts of average cost, unrealized, and realized P&L, consider the following example.

### Example

**Step 1: Opening a position**

A trader has executed the below orders:

Trade 1: Buy 1 BTC at 10,000

Trade 2: Buy 2 BTC at 10,450

In this case:

Average Cost = (1 x 10,000 + 2 x 10,500) / (1 + 2) = 10,300

Assume the Mark Price is 10,500. Then:

Unrealized P&L = 3 x (10,500 - 10,300) = 600

Realized P&L = 0

**Step 2: Partially closing the position**

The trader now sells part of their position:

Trade 3: Sell 1 BTC at 10,550

The Average Cost remains unchanged. Assume the Mark Price is still at 10,500, then:

Unrealized P&L = 2 x (10,500 - 10,300) = 400

Realized P&L = 1 x (10,550 - 10,300) = 250

**Step 3: Closing the remainder of the position**

The trader continues to sell the remainder of their position:

Trade 4: Sell 2 BTC at 10,370

Across all sell trades, we see:

Average Exit Price = (1 x 10,550 + 2 x 10,370) / 3 = 10,430

The Mark Price no longer matters, as there is no longer any open position.

Unrealized P&L = 0

Realized P&L = 3 x (10,430 - 10,300) = 390

For further assistance or more information, please contact our Customer Support team via help@eqonex.com or click on the chat widget at the bottom right-hand side of the EQONEX page.