BeaconUnrealized PnL Defined
Unrealized PnL (profit and loss) represents the current gain or loss on an open trading position. It is called "unrealized" because the profit or loss has not been locked in - it only exists on paper and changes with every price tick. Until you close the position, the PnL is theoretical. A $500 unrealized profit can become a $200 loss if the market reverses before you exit.
In perpetual futures trading, unrealized PnL is continuously updated based on the mark price of the asset. It is displayed prominently in your trading interface because it directly affects your margin balance, your liquidation price, and your ability to open new positions.
How Unrealized PnL Is Calculated
The calculation is straightforward. For a long position (you bought, expecting the price to rise): Unrealized PnL = (Current Mark Price - Entry Price) multiplied by Position Size in units. If BTC is at $65,000, you entered at $60,000, and your position is 0.5 BTC, your unrealized PnL is ($65,000 - $60,000) x 0.5 = $2,500 profit.
For a short position (you sold, expecting the price to fall): Unrealized PnL = (Entry Price - Current Mark Price) multiplied by Position Size. If you shorted ETH at $3,500 and the current mark price is $3,200, with a position size of 5 ETH, your unrealized PnL is ($3,500 - $3,200) x 5 = $1,500 profit.
With leverage, your unrealized PnL is amplified relative to your margin. A $100 margin with 10x leverage controls a $1,000 position. A 5% price move in your favor generates $50 of unrealized PnL - a 50% return on your margin. Of course, the same amplification works in reverse. Use the PnL calculator to estimate returns before trading.
Unrealized vs Realized PnL
The distinction between unrealized and realized PnL is fundamental. Unrealized PnL is fluid - it changes with every market movement and exists only as long as your position is open. Realized PnL is permanent - it is the actual profit or loss recorded when you close a position, and it directly changes your account balance.
You can have a position showing large unrealized profits that ultimately closes at a loss if you hold through a reversal. This is why the saying "you have not made money until you sell" exists in trading. Unrealized gains feel real but they can evaporate quickly, especially in leveraged positions where price movements have amplified effects.
Some traders use a rule-based approach: when unrealized PnL reaches a target (say, 2x their initial risk), they close a portion of the position to realize some profits while letting the remainder ride. This converts some unrealized gains to realized gains while maintaining exposure to further upside. There is no single right approach - it depends on your strategy and risk tolerance.
Impact on Margin and Position Management
In cross margin mode, unrealized PnL directly affects your total account equity and therefore your margin ratio. Positive unrealized PnL increases your available margin, which can lower your overall liquidation risk and even allow you to open additional positions. Negative unrealized PnL decreases your available margin, bringing all of your positions closer to liquidation.
In isolated margin mode, unrealized PnL affects only the specific position it belongs to. Negative unrealized PnL moves the position closer to its isolated liquidation price, but it does not impact your other positions or your available account balance.
Understanding this relationship is critical for managing multiple positions. In cross margin, a large unrealized loss on one position can trigger liquidation of a different, otherwise healthy position because they share the same margin pool. This cascading risk is one reason some traders prefer isolated margin for independent trades.
When Unrealized PnL Becomes Realized
Unrealized PnL becomes realized in three scenarios. First, when you voluntarily close your position (in full or in part). Closing at a profit adds to your balance; closing at a loss subtracts from it. Partial closes realize a proportional amount of the PnL.
Second, when your position is liquidated. The liquidation engine closes your position at the available market price, and the loss becomes realized. In this scenario, you lose your entire maintenance margin (in isolated mode) or a significant portion of your account (in cross margin mode).
Third, funding rate payments are a form of periodic realized PnL. Every 8 hours on Hyperliquid, funding payments are settled - these are small realized gains or losses applied to your position regardless of price movement. While not typically classified as "closing" a position, funding payments do convert a small amount of unrealized value into realized value.