# Net P&L vs Gross P&L - Knowing the Difference

> Net and gross P&L tell different stories about your trading performance. Here is which one to use for each type of analysis.

**Tags:** net-pnl, gross-pnl, commission, swap, metrics
**URL:** https://traderjournal.app/trading-metrics/net-pnl-vs-gross-pnl-difference

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# Net P&L vs Gross P&L - Knowing the Difference

Every trade has two P&L figures: gross and net. Confusing the two leads to unrealistic assessments of your trading performance. Here is a clear breakdown of what each represents.

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## Gross P&L

Gross P&L is your profit or loss from pure price movement, before any broker costs are deducted.

On a EURUSD buy trade:
- Entry: 1.0850
- Exit: 1.0880
- Price movement: 30 pips up
- Lot size: 0.5 lots
- Gross profit: 30 pips x $5 per pip (0.5 lots) = $150

That $150 is your gross profit. It is the theoretical profit assuming zero trading costs.

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## Net P&L

Net P&L is your actual profit or loss after deducting all broker costs: commission and swap.

Using the same trade:
- Gross profit: $150
- Commission: -$7 (typical ECN commission, round trip)
- Swap: -$3 (if held overnight)
- Net P&L: $150 - $7 - $3 = $140

Your account balance changes by $140, not $150.

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## Why the Difference Matters

For short-duration trades with small price targets, the difference between gross and net P&L can be significant as a percentage.

On a 10-pip scalp generating $50 gross with $7 commission, your net profit is $43. Commission represents 14% of your gross profit. For this strategy to work, your gross win rate needs to be high enough to overcome the 14% cost drag.

On a 150-pip swing trade generating $750 gross with the same $7 commission, net is $743. Commission is less than 1% of gross. The cost impact is trivial.

This is one reason why scalping strategies require higher win rates than swing strategies to achieve the same net profitability - the proportional cost is higher.

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## Which P&L to Use for Each Analysis

**For strategy evaluation:** Always use net P&L. Strategies should be evaluated on the actual money they produce after all costs.

**For entry/exit analysis:** Gross P&L helps you understand how well your entries and exits capture price movement, independent of costs. If your gross P&L is consistently positive but costs are eating it, you have a cost management problem, not a strategy problem.

**For profit factor calculation:** Use net P&L. Profit factor calculated on gross P&L overstates your actual edge.

**For win rate calculation:** Either works, but be consistent. Net P&L win rate may differ slightly from gross win rate if commissions turn marginal gross winners into net losers.

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## The Spread-Based Broker Consideration

For traders at spread-based brokers (no explicit commission), there is no separate commission line. The spread is automatically included in your entry price, so your gross P&L already reflects the spread cost.

At a spread-based broker, "net P&L" and "gross P&L" are effectively the same for closed trades (swap still applies for overnight holds). The distinction matters most for ECN/raw spread accounts with explicit per-trade commission.

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Trader Journal shows gross profit, commission, swap, and net P&L separately on every trade detail page via the EA sync.

Download at android.traderjournal.app or ios.traderjournal.app.