After opening the precious metals trading software, many users notice that even with minor market movements, the figure of unrealized profit and loss in the account may keep fluctuating. Lucky Gold believes that to understand this phenomenon, you first need to clarify the relationship among entry price, current quotes, trading lot size and bid & ask prices.
What is Unrealized Profit and Loss?
Unrealized profit and loss refers to the real-time result calculated based on the current market price while a trade remains open.
Since the trade is still held and the final outcome is undetermined, the figure keeps updating along with market movements.
If the market price moves in favour of your position, the unrealized result may rise; if the price moves in the opposite direction, the corresponding figure will change accordingly.
Only after the trade is closed will this figure stop fluctuating with the market.
Why Does the Unrealized Figure Shift Even with Slight Price Movement?
One factor is trade volume.
The same price movement will exert different impacts on the displayed account result under different lot sizes.
Therefore, you should not only focus on how much the gold price has moved, but also understand changes in unrealized profit and loss in combination with the actual trade size.
Another factor is bid price and ask price.
Precious metals trading software displays two-way market quotes simultaneously. The prices used to calculate real-time results for buy orders and sell orders are not identical.
This explains why immediately after opening a position, the unrealized figure may not start from zero even if the market shows no obvious directional movement.
Spreads Are Also Reflected in the Trading Software
There is a gap between bid and ask prices, commonly known as the spread.
The spread is one of the basic costs to understand during trading.
When viewing real-time profit and loss in the precious metals trading software, users need to take spreads into consideration, instead of simply subtracting the entry price from a single market price.
You should also get familiar with the platform’s published trading specifications, quantity per lot and specific spreads before you start trading.
Do Not Let Fluctuating Figures Replace Your Trading Plan
The defining feature of unrealized profit and loss is its real-time fluctuation.
If users keep staring at the constantly changing numbers, they are likely to alter their original plans frequently due to short-term volatility.
A more sensible approach is to define your observed price zone, trade size, take-profit and stop-loss arrangements before opening a trade, then use the software to track whether the market matches your original judgement.
Lucky Gold provides self-developed mobile applications and MT5 trading services. Users can check market quotes, candlesticks, account data and position changes.
The figures displayed in precious metals trading software are not complicated in themselves. What truly matters is understanding what each figure represents. Once you grasp how unrealized profit and loss is calculated, the account page will no longer be merely a stream of changing numbers, but an important tool for monitoring your trading status.