Open P&L, Realised P&L and Mark-to-Market: Read Your Trading Account Correctly

Open P&L, Realised P&L and Mark-to-Market: Read Your Trading Account Correctly

বাংলায় পড়ুন

A green number beside an open trade is not the same as money locked into the account. It is a live estimate based on the price used by the broker or platform. That estimate can change before the position is closed, and the price you can actually trade may differ from the last price shown on a chart.

This tutorial explains open P&L, realised P&L and mark-to-market so that traders can read account equity, size risk and review performance without confusing a temporary valuation with a completed result.

Learning objective

By the end, you should be able to identify which part of your result is still exposed to the market, explain how a platform marks an open position, reconcile balance with equity and record a trade without overstating profit.

Use this lesson alongside position sizing, portfolio heat and a consistent trading journal.

Three numbers that answer different questions

The labels vary between brokers, but the economic ideas are usually:

• Open or unrealised P&L: the estimated gain or loss on positions that remain open.
• Realised P&L: the result crystallised by closing all or part of a position, usually before some account-level fees, financing or tax treatment.
• Mark-to-market: the process of valuing a position at a current reference price.

Suppose 100 shares are bought at £20.00. If the platform marks them at £21.00, the open profit is approximately £100 before costs. If the market falls to £19.50, that display becomes an open loss of about £50. Neither number describes a completed round trip while the shares remain held.

If 40 shares are then sold at £20.80, approximately £32 of gross profit is realised on that portion. The remaining 60 shares still have open P&L. One trade can therefore contain both realised and unrealised results.

Step 1: find the price used for the mark

An open position must be valued against something, but platforms do not all use the same reference. Depending on the market and account, the mark may use:

• the last traded price;
• the bid for a long position and the offer for a short position;
• the midpoint between bid and offer;
• a fair-value or index price designed to reduce the effect of isolated prints;
• an official settlement price at the end of a session.

This choice matters. A thinly traded instrument may show a stale last price. A chart may display the midpoint while a market sell order executes at the bid. In a wide spread, the difference can be material.

Check the broker's product specification and account statement rather than assuming the chart price is the liquidation price.

Step 2: distinguish balance from equity

Many leveraged trading accounts show both balance and equity. A simplified relationship is:

Equity = cash balance + open P&L − accrued charges

The exact labels and calculation depend on the provider. Balance often changes when trades are closed, cash is moved, or fees are posted. Equity moves while open positions are revalued.

Margin capacity is normally linked to equity rather than to yesterday's balance. A trader can therefore have a positive historical balance and still face a margin problem if open losses reduce current equity. The reverse is also important: a large open profit may create apparent spare capacity, but that capacity can disappear if the market reverses.

Step 3: understand when “realised” is not yet net profit

Closing a position converts price movement into realised trading P&L, but the amount shown may still exclude other cash flows. Review:

• commission and exchange fees;
• bid-ask spread already embedded in execution;
• slippage between the intended and filled price;
• overnight financing, borrow fees or funding adjustments;
• contract-specific settlement and currency conversion;
• tax, which depends on jurisdiction and personal circumstances.

For performance analysis, use net realised P&L after trading costs. A strategy can appear profitable on gross closed trades while costs make the account result negative.

Step 4: know that futures can settle differently

Exchange-traded futures are commonly marked to an official settlement price, with variation margin credited or debited through the account. This can make daily gains and losses behave like settled cash flows even though the futures position remains open.

That is different from simply viewing an unrealised number on a share position. Contract rules, settlement procedures and broker statements determine the exact treatment. When reviewing futures, record both the open contract and the cumulative variation margin so that daily settlements are not counted twice.

Worked example: a profitable screen, a smaller account result

Consider a hypothetical long position of 500 units bought at £10.00:

• current mark: £10.40;
• displayed open profit: 500 × £0.40 = £200;
• estimated round-trip commission: £18;
• accrued financing: £12;
• current executable bid: £10.37 rather than the £10.40 chart midpoint.

If the position is sold at £10.37, the gross price result is:

500 × (£10.37 − £10.00) = £185

After the illustrative £18 commission and £12 financing charge, the net result is approximately £155 before any other adjustment. The screen's £200 open profit was useful as a live estimate, but it was not the final outcome.

Now imagine the trader has already sold 200 units at £10.25. Gross realised P&L on that portion is £50. The remaining 300 units must be marked separately. Mixing the £50 realised gain with the original 500-unit open calculation would overstate the result.

Step 5: reconcile every position in a simple ledger

For each instrument, record:

1. opening quantity and average entry price;
2. each partial exit and its actual fill;
3. remaining quantity;
4. the reference price used for the current mark;
5. realised gross P&L;
6. open P&L on the remaining quantity;
7. commission, financing and other charges;
8. net account impact.

Reconcile the ledger with the broker statement, not only with screenshots. Screenshots are helpful for context, but they may omit later fees, corrections or currency conversion.

Common mistakes

• Treating a large open winner as available income before reducing or closing it.
• Increasing risk because unrealised profit temporarily raises account equity.
• Comparing one broker's midpoint-based P&L with another broker's bid-or-offer valuation.
• Recording partial exits as if the entire position had closed.
• Ignoring fees and financing when calculating realised performance.
• Counting futures variation margin and the same price movement again at final close.
• Using a stale chart price for an illiquid position.

Practical checklist

Before relying on the P&L shown on screen, ask:

• Is this number open, realised or net of all charges?
• Which price is being used to mark the position?
• What price could I reasonably execute now?
• How much quantity remains open after partial exits?
• Does current equity still support the position if the market gaps?
• Have commission, financing and currency effects been included?
• Does my journal reconcile with the official statement?

The Money Man view

Open P&L is a risk-management input, not a promise. Realised P&L is more definite, but only net cash after costs gives a clean account-level result. Traders who separate those layers make better decisions about exposure, withdrawals and performance.

The most useful habit is to reconcile quantity, price and costs after every partial exit. That simple process prevents a flattering screen value from becoming a false picture of the strategy.

Educational content only. This is not personalised investment, tax or financial advice. Trading and leveraged products can result in losses greater than expected. Product rules, margin methods and account terminology vary by broker and jurisdiction; check the relevant contract specification and regulated provider documentation before trading.