Unrealized PnL — also called floating P&L or open P&L — is the profit or loss on a position that is still open. It exists only on paper, fluctuates with every tick of the market, and becomes realized PnL only when the trade is closed. Understanding the difference between unrealized and realized figures is essential for managing margin, drawdown, and prop firm challenge rules accurately.
Key Takeaways
- Unrealized PnL changes on every tick and affects your equity but never your balance — a floating loss of $600 does not reduce your balance until you close the trade.
- Prop firm drawdown rules (FTMO, FundedNext) are calculated on equity, so a large open loss can fail a challenge even with no closed trades.
- Tracking unrealized equity curves reveals floating drawdown patterns that a closed-trade-only review will miss entirely.
How to Calculate Unrealized PnL
The formula for unrealized PnL in forex is:
Unrealized PnL = (Current Price − Entry Price) × Position Size in Units
The result is in the quote currency and must be converted to your account currency. For EUR/USD — where the quote currency is USD — no conversion is needed for a USD-denominated account.
Components:
- Current Price — the live bid (for long positions) or ask (for short positions)
- Entry Price — the price at which the trade was opened
- Position Size in Units — a standard lot is 100,000 units; a mini lot is 10,000 units
For EUR/USD, each 1-pip move equals $10 per standard lot. If price moves 70 pips in your favor, unrealized PnL is $700. If it moves 60 pips against you, unrealized PnL is −$600.
In MT4/MT5, unrealized PnL appears in the “Profit” column of the Trade tab. It updates in real time and resets to realized PnL only when the position is closed.
Quick Reference
| Aspect | Detail |
|---|---|
| Formula | (Current Price − Entry Price) × Units in account currency |
| Pip value (EUR/USD, 1 standard lot) | $10 per pip |
| Where it appears | MT4/MT5 Trade tab “Profit” column; Equity field in real time |
| Impact on Balance | None — balance only changes on close |
| Impact on Equity | Direct — Equity = Balance + sum of all open unrealized PnL |
| Warning Signs | Floating loss approaching prop firm drawdown limit; free margin shrinking below comfortable buffer |
Practical Example
A trader has a $10,000 account and enters long EUR/USD at 1.0850 with 1 standard lot. Price dips to 1.0790 — a 60-pip move against the position.
- Unrealized PnL: (1.0790 − 1.0850) × 100,000 = −$600
- Equity: $10,000 − $600 = $9,400
- Used margin at 1:30 leverage: ~$362
- Free margin: $9,400 − $362 = $9,038
No immediate danger at this point. But the trader adds a second standard lot at 1.0790, averaging down. Price continues to 1.0720 — another 70 pips.
- Position 1 unrealized PnL: (1.0720 − 1.0850) × 100,000 = −$1,300
- Position 2 unrealized PnL: (1.0720 − 1.0790) × 100,000 = −$700
- Total unrealized loss: −$2,000
- Equity: $8,000
- Used margin for 2 lots: ~$724
- Free margin: $8,000 − $724 = $7,276 — now approaching territory where the broker’s margin call threshold matters
On a prop firm account with a 10% max drawdown ($1,000 limit on a $10,000 account), equity at $8,000 means the challenge is already failed — mid-trade, with no positions closed. This is how FTMO’s equity-based drawdown rule catches traders off guard.
Unrealized PnL is the floating profit or loss on an open trade. It changes with every price movement, affects your account equity in real time, but does not change your balance until you close the position.
Common Mistakes
- Monitoring only closed-trade results. A session can show three winning closed trades while a large open loser quietly erodes equity. Reviewing only realized PnL hides the true risk exposure during a session.
- Ignoring equity-based drawdown on prop accounts. FTMO’s 10% overall drawdown and 5% daily drawdown are both calculated on equity. A 500-pip floating loss on a single standard lot ($5,000 unrealized) can breach the overall limit on a $50,000 account before a single trade is closed.
- Using unrealized loss as justification to hold. The sunk-cost fallacy runs deep in trading: because an unrealized loss is not yet “real,” traders let positions run far beyond their original stop. This is one of the most common sources of drawdown that does not appear in a closed-trade win rate.
- Underestimating overnight gap risk. Unrealized PnL can shift dramatically on gap opens — particularly around NFP, FOMC announcements, or weekend geopolitical events. A position that closed Friday with a $200 floating gain can open Monday at −$800 with no opportunity to exit in between.
How PipJournal Tracks Unrealized PnL
PipJournal’s equity curve visualization captures floating drawdown behavior across each session — not just closed-trade results — giving traders an honest picture of how much heat they took before a position resolved. This helps identify whether a winning trade was genuinely managed well or survived despite poor execution. The equity view is particularly useful for prop firm traders who need to stay within FTMO’s 5% daily drawdown ceiling in real time.
