P&L (Profit and Loss)

### Three numbers, not one **Realised P&L** is settled history: trades you have actually closed. **Unrealised P&L** is the floating value of what is still open, and it moves every tick. **Daily P&L** is just today's slice of both. Beginners collapse all three into the single number at the top of the screen, and then let that number make decisions. ### Unrealised P&L is not cosmetic Calling it "paper" money is misleading. It is marked to market continuously, so it moves your account equity as the price moves, and equity is what margin requirements are measured against. A large floating loss can shrink what your broker will let you do next, before you have closed anything. How closely that is tracked is a broker decision. FINRA's intraday margin standards leave the mechanics to the firm, and FINRA notes that some monitor margin accounts through the trading day while others compute the requirement at the close. Either way, unrealised P&L is not a number you get to ignore until you close the trade. It is a number your broker is watching too. ### Why the running number hijacks you The behavioural evidence here is unusually solid. Terrance Odean's study of 10,000 accounts at a large discount brokerage, published in the *Journal of Finance* in 1998, found a strong preference for realising winners rather than losers, and found that this preference was **not** justified by how those stocks went on to perform. People sold what was green and held what was red. December was the exception, when tax-motivated selling took over. That is the disposition effect, and a live P&L display feeds it directly. The moment you see a position up on the day, the question in your head quietly changes from *"has my plan been invalidated?"* to *"do I want to keep this gain?"* Those are different questions, and they have different answers. ### The mistake Judging a trade by its P&L. A trade that followed the plan and lost is a good trade. A trade that broke the plan and won is a bad trade that happened to get paid, and it will bill you later. This is why the rest of the system pushes you toward **R-multiple** instead. Dollar P&L is not comparable across trades, because $200 risked on one and $20 risked on another are not the same event, even if both made $50. R normalises the result by what you actually risked. **Expectancy** is your average R across many trades, and that is what tells you whether an edge exists at all. The P&L ticker cannot tell you that. It can only tell you how you feel right now. Review P&L at the end of the session, in R, in aggregate. Not mid-trade, in dollars, one position at a time.