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| The Tool to Improve Your Investing Strategy | Cryptocurrency trading is highly volatile, so understanding the concept of profit and loss (PnL) is essential for informed decisions . PnL tells you how much money you've made or lost over a certain time and, therefore, helps you stay aware of how well your trades are doing and if your investing strategies are working. This newsletter provides a quick overview, with more details in our full article. | | | Profit and loss (PnL) is a metric for assessing financial performance and the effectiveness of trading strategies. PnL can be realized (profit or loss from trades you've completed) & unrealized (potential profit or loss on trades you're still holding). | | | | Examples of PnL Calculation | | Long Trade: Buying 1 BTC at $50,000 and selling at $60,000 results in a realized profit of $10,000. | | | Short Trade: Selling 1 ETH at $2,500 and buying back at $2,000 results in a realized profit of $500. | | | | | | FIFO (First-in, First-out): Assumes the first assets bought are the first sold. | | | LIFO (Last-in, First-out): Assumes the last assets bought are the first sold. | | | Weighted Average Cost: Averages the cost of all assets to calculate PnL. | | | | | Have you enjoyed this letter? | | | | | © Changelly 2015—2024
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