Understanding Profit in Stable Coins vs. Crypto Coins: Realised and Unrealised Profit Explained
When trading cryptocurrencies, it's important to understand the difference between realised and unrealised profit, especially when dealing with stable coins versus crypto coins. Many traders focus solely on the profit in USD or USDT value on their exchange, but this can be confusing without a clear understanding of the types of tokens in their portfolio.
If a trader is primarily holding stable coins, such as USDT, then their realised and unrealised profit will be calculated in terms of the stable coin value. However, if they're holding cryptocurrencies like BTC, ETH, or ALGO, then their realised and unrealised profit will be calculated in terms of the crypto coin value.
Realised profit refers to the profit a trader has made from a completed trade, while unrealised profit is the profit on open positions that have not yet been closed. Traders should understand the difference between the two and decide which profit they believe is the true profit.
By having a clear understanding of realised and unrealised profit, traders can make informed decisions and avoid confusion when trading with stable coins and cryptocurrencies
Let's first understand the difference between realised and unrealised profit in USD or USDT.