How To Calculate Profit On Coinrule

It is important to calculate properly the P&L of a rule to give us an idea of the actual value added by launching a specific rule. Traders must calculate profit correctly to understand the overall profitability of their trading as a whole. The article explains how to calculate the profit on Coinrule.

The profit calculation for Coinrule has been designed in a way that portrays the real performance of the rule and shows the real value Coinrule adds to your holdings. The total profit in the dashboard is the sum of all rules (active and completed). The profit calculation does not take into account demo rules. 

Realized and Unrealized Profit

Rules can open multiple trades at the same time. To calculate the P&L of a rule, we need to consider both trades that are closed and those that are still open.

To do that, Coinrule uses the concept of realized and unrealized profit when calculating the P&L of a rule.

An unrealized gain or loss refers to trades that are still open, for example, coins bought and not sold or vice versa. It takes as reference the current market price of that coin relative to the entry price. As it changes depending on market conditions, the unrealized profit can change over time until the trade is closed.

Example:

If you buy 1 ETH at $500

After one day, the current price is $600, so the P&L will show a profit of $100

The following day the current price drops to $550, so the P&L will decrease by $50

A realized profit, instead, refers to trades that are complete. Here the calculation compares the exit with the entry price. The realized P&L remains as it pictures the performance of each closed trade.

Example:

If you buy 1 ETH at $500

After one day, the current price is $600, and you sell at that price, the P&L will show a profit of $100

The following day the current price is $550, but you sold all the coins, so the P&L is still $100

More Examples

Case 1:

Bought 1 ETH at $500, the current price is $600

Unrealized profit= (market price-entry price)* Quantity
= (600-500)*1= $100

If the position is closed at $650

Realized profit = (Sell price – entry price)* Quantity 

= (650-500)*1=$150

The realized profit of the position is not going to change.

Case 2

Buy 1 ETH at $500, Sell half the position at $650, 

Realized profit = 650-500*0.5= $75 

The second half of the position remains open with a current unrealized profit of $75. The total profit that the rule shows is $150.

If the price drops from $650 to $600, and you sell that price, you will realize a profit of (600-500)*0.5= $50. The total profit that the rule shows is 50 + 75 = $125.

Case 3:

Sold 1 ETH at $500, the current price is $600

Unrealized loss = (entry price – market price) * Quantity
= (500 – 600) * 1= -$100

In this case, the rule shows a temporary loss of $100 because you would have been better off holding the coin rather than selling.

If the price drops and you buy back Ethereum at $450

Realized profit = (Sell price – entry price) * Quantity 

= (450-500) * 1 = $50 

Possible differences between P&L on Coinrule vs. Exchanges 

The system calculates profit independently for each rule. When users intervene manually, this affects the P&L of the rule. An example can be seen below: 

Sell 1 ETH at $500, and the current price is $450. The user repurchases the coin manually at $450.

The user has profited; however, since the action was not part of the rule, the system does not record the sell action. If the price increases above the initial sell price, the rule will show a loss, indicating that you should have bought back the coins. 

As a rule of thumb, any trade that happens outside of a rule is not taken into account, and this is because every rule takes into account its actions to give a proper overview of what value a rule can specifically add to the wallet.

If you don’t trade manually on your account, ideally, the sum of all the rules should be the actual P&L on your account because of Coinrule.

The profit does not take into account the trading fees, which are shown separately within the rule.

Overall, the profit calculation in Coinrule is designed to portray the real value that Coinrule adds to one’s wallet while trading. The total profit on the dashboard gives a trader an overall idea of his performance while trading. Having a proper profit calculation allows traders to reassess their strategies’ success or failure and adjust accordingly.