Recently, someone asked about PNL in trading, and it turns out many people are still confused about the difference between unrealized and realized. Here's the thing, PNL stands for Profit and Loss, but there are two completely different conditions.

The first is unrealized PNL, or what you could call paper profit or loss. This is money you could get if you sell the asset now, but haven't sold it yet. For example, you buy a car for $10,000, and now its price has increased to $15,000. That means your unrealized profit is $5,000. But remember, it's still just on paper, not actual cash in your hands.

The second is realized, which happens when you actually sell the asset. If you sell the car for $15,000, your realized profit is $5,000, and that money has actually gone into your account. The difference is clear: realized is a final, fixed profit, not just potential.

So basically, unrealized PNL is a "what if" situation, but realized PNL is what actually happens. In crypto trading, it's very important to understand this so you don't miscalculate your profit or loss. Many traders focus on unrealized profit and forget that prices can change at any time before they sell. But once you execute and sell, that's when the profit or loss is truly realized.