Unrealized PnL is the unrealized profit or loss that would have been incurred if all positions were closed at the current market price. This is different from realized PnL, which is the actual profit or loss that has been incurred when positions are closed.
The main reason why Unrealized PnL is important is because it provides traders with an idea of how their portfolios would have performed if they had exited all their positions at the current market price. This information can be used to make informed decisions about when to exit trades.
Another reason why Unrealized PnL is important is because it is a good indicator of the overall health of a trader’s portfolio. If the Unrealized PnL is consistently negative, it could be an indication that the trader’s portfolio is not well-diversified or that they are taking on too much risk.
In conclusion, Unrealized PnL is an important metric for traders to track as it can provide insights into the performance of their portfolios and help them make informed decisions about when to exit trades.