Cryptocurrency Profit and Loss: How to Calculate Your PnL
What is Profit and Loss (PnL)?
Profit and Loss (PnL) refers to the financial gain or loss from buying and selling cryptocurrencies. It is a metric used to evaluate the financial performance of a trader or investor in the crypto market. Mark-to-market (MTM) is an important concept for calculating PnL, as it reflects the current market price of a digital asset.
Key Terms and Calculations
The general formula for calculating PnL is: MTM Price Today – MTM Price Yesterday = Profit/Loss. Future value indicates the value of a digital coin at a future point in time, which can be calculated using present value and rewards rate.
How to Own this Piece of History?
Cryptocurrency traders are able to collect their profits by owning the article as an NFT (non-fungible token). This allows them to own their trading history, no matter how big or small, as an immutable digital asset on-chain.
Understanding key terms like MTM, realized/unrealized PnL, as well as future values, will help cryptocurrency traders further develop their understanding of profit and loss within the crypto world. By collecting profits through owning articles as an NFT, traders can also have a record of their trading journey that will remain with them forever.
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