The total profit or loss on your trades — the scorecard for your trading performance.
P&L is the running total of how much money you've made or lost. It comes in two flavors: realized P&L (from closed trades — locked in) and unrealized P&L (from open trades — still moving). Pros track both, but the realized number is the only one that matters at the end of the month.
P&L can be measured in dollars, in pips, in R-multiples (multiples of your initial risk), or as a percentage of starting equity. Each tells a different story. Dollars matter for taxes. Pips matter for system evaluation. R-multiples matter for risk-adjusted thinking. Percentages matter for compounding.
A trader who's up $5,000 on a $10,000 account is up 50%. The same trader up $5,000 on a $1,000,000 account is up 0.5%. Both numbers are real, but only one of them tells you anything useful about the trader's skill.
Real trade example
Prop firms like FTMO measure traders on a profit target (usually 8-10%) over 30 days, with strict daily drawdown limits. The P&L scorecard is the entire evaluation.
Frequently asked about p&l (profit and loss)
What is a p&l (profit and loss) in trading?+
The total profit or loss on your trades — the scorecard for your trading performance.
When will I see p&l (profit and loss) used in real trading?+
On every broker dashboard, every trading journal, every prop firm scorecard.
What is the most common mistake traders make with p&l (profit and loss)?+
Obsessing over daily P&L. Markets are noisy on the day-to-day. Look at WEEKLY P&L for system health and MONTHLY P&L for strategic decisions. Daily checks just feed emotion.
What do experienced traders know about p&l (profit and loss) that beginners don't?+
Track P&L in R-multiples, not dollars. "+12R this month" tells you the system worked regardless of size. "+$1,200" hides whether you were lucky on size or smart on setups.