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Anyone who has dealt with trading in traditional finance is likely to be aware of profit and loss (PnL). But is PnL in the cryptocurrency world the same? The ability to comprehend terms like mark-to-market (MTM), realized PnL and unrealized PnL will help develop a better understanding of the cryptocurrency a person holds.
Without a well-defined process to get insight into profit or loss, cryptocurrency trading may be overwhelming, and traders may struggle with what they are doing. PnL reflects the change in the value of a trader’s positions over a specific period.
MTM
Future value
Realized PnL
Unrealized PnL
First-in, first-out (FIFO) method
Last-in, first-out (LIFO) method
Weighted average cost method
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