Realised P&L is the profit or loss attributed to the quantity of a position that has actually been closed, measured against its matched opening cost or price. Also spelled realized P&L, it tells a trader what completed trades earned. A sale's cash proceeds include the capital recovered as well as any gain, so proceeds alone cannot measure profitability.
Here the term means economic trading P&L under explicit matching and cost conventions. A broker statement or tax report may apply its own rules. Interactive Brokers, for example, distinguishes closed-position P&L from open-position marks; that is a useful operational distinction rather than a universal tax definition.
USD 550 received does not mean USD 550 earned
Consider one synthetic lot of 10 shares bought at USD 50 per share and later sold at USD 55. Both fills are stipulated. Allocate a USD 1 entry fee and a USD 1 exit fee entirely to this round trip. There are no distributions, financing charges, taxes or currency changes.
| Closed-trade calculation | USD |
|---|---|
| Gross sale proceeds: 10 × 55 | 550 |
| Matched purchase cost: 10 × 50 | −500 |
| Gross realised P&L | 50 |
| Total allocated fees: 1 + 1 | −2 |
| Net realised P&L | 48 |
For a long position with closed quantity , matched entry price , exit fill price and allocated explicit costs ,
This simple formula assumes one currency, one matched entry price and no other cash flows. Use the actual closing quantity and fill price, not the order size or an exit rule's trigger. Selling only part of a position realises only that part: in a separate comparison ignoring fees, closing 4 of these shares at 55 realises USD 20, while the remaining 6 retain USD 30 of unrealised P&L at the same mark.
State which costs “net” includes. Entry fees may be included in a reported cost basis, exit fees may reduce reported proceeds, or costs may appear separately. Deduct each charge once. Likewise, actual fill prices already contain their execution disadvantage relative to a chosen benchmark; subtracting that same transaction cost again understates profit.
Closing at the mark changes the form of the asset
Before the full sale, a USD 55 mark already values the shares at USD 550. The gross USD 50 price gain is then unrealised. Closing at that same price makes the gain realised and replaces the holding with a sale receivable or cash; it does not create a second USD 50 gain.
To make this visible, start the example account with USD 1,000. For this simplified economic ledger, recognise trade cash immediately and ignore settlement delay; the cash column is not a claim about immediately withdrawable broker funds. After purchase and its USD 1 fee, cash is USD 499. Just before sale, cash plus marked holdings is USD 1,049. After sale and its USD 1 fee, the flat account holds USD 1,048.
Original synthetic economic ledger. All prices are USD per share, all account values are USD, and fills are stipulated. The sale occurs at the existing mark; only the exit fee changes equity at that instant.
Without the exit fee, marked equity would be unchanged at the sale. If the fill differs from the mark, that execution difference also affects equity. Realisation and new economic gain are therefore separate questions.
The Positions, Trades, Fills and P&L lesson derives this cash-and-holdings reconciliation and extends it to partial fills and changing marks. Its preview is public; the full lesson requires membership.
Read the matching rule and the whole account
With several entry lots, a closing sale must be matched to an identified quantity and opening cost. Different matching conventions can allocate different amounts between realised and unrealised P&L. IBKR's reporting guide documents several methods and shows that fee presentation also depends on the report. Check the applicable account, instrument and reporting rules rather than assuming one method applies everywhere.
Realised trading P&L is also narrower than total account performance. An account can realise winning trades while retaining large open losses. Income, funding, other charges and external deposits or withdrawals must be reconciled separately. An equity curve includes the valuation of remaining positions; a closed-trade total alone can hide that exposure. Realised profit also need not imply settled or freely withdrawable cash.
Sources
- Interactive Brokers — Profit and Loss: the platform's distinction between realised, unrealised and daily P&L, including its stated commission treatment.
- Interactive Brokers — Realized & Unrealized Performance Summary in Base: opening/closing matching methods and report-specific commission presentation.
- Rishi K. Narang, Inside the Black Box: A Simple Guide to Quantitative and High-Frequency Trading, 2nd edition (Wiley, 2013), Chapter 10, “How Quants Monitor Risk,” pp. 193–194: realised/unrealised monitoring as a diagnostic alongside portfolio performance.