# Profit & Loss

To make or lose money when trading futures:

* **Making Money:**
  1. **Long Position:** Buy a futures contract expecting the price to rise. Sell when the price increases to realize a profit.
  2. **Short Position:** Sell a futures contract expecting the price to fall. Buy back at a lower price to profit from the difference.
* **Losing Money:**

  1. **Long Position:** If the price falls after purchasing, selling at a lower price results in a loss.
  2. **Short Position:** If the price rises after selling, buying back at a higher price incurs a loss.

  Profit or loss is determined by the difference between the entry and exit prices of the futures contracts.

#### Realized vs. Unrealized Profit & Loss

**Realized Profit & Loss:**

* Occurs when a trade is completed.
* The profit or loss is locked in when the position is closed.
* Reflects actual gains or losses that affect one's account balance.

**Unrealized Profit & Loss:**

* Represents potential gains or losses on open positions.
* Changes with market price fluctuations.
* Not locked in until the position is closed.


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