Understanding portfolio performance on Kraken Pro

This article explains some of the more technical concepts and metrics on the Portfolio page of Kraken Pro.

Note:

While these metrics are useful for portfolio management, they should not be used for tax purposes. While they are intended as indicators for all clients regardless of location or jurisdiction, each country or region may have its own ways of calculating and accounting cost basis and P&L.

Portfolio metrics

Average price, cost basis, and profit & loss (P&L) are key metrics that can give you a clearer picture of how your assets are performing. Here’s what they mean, why they matter, and how they’re calculated.

Average price

The average price for an asset you hold is the balance-weighted average price you paid to acquire your current balance. This metric is essential because it helps you to determine the starting point for calculating profits or losses.

Example:

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If you buy 10 ETH at 3,000 USD, your average price is 3,000 USD.
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If you buy 5 more ETH at 3,600 USD, your average price becomes the balance-weighted average of both purchases:
(10 * 3,000 + 5 * 3,600) / 15 = 3,200 USD
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If you then sold 5 ETH, your average price would not change because this is simply the average price of your purchases, not your spends.

Cost basis

The cost basis of an asset is the average price multiplied by your balance. It represents the value you’ve spent to acquire your current balance.

Example:

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If your average price for ETH from the previous example is 3,200 USD and you hold 15 ETH, your cost basis is 48,000 USD.

Notes:

We make the following adjustments to average price and cost basis to assist with the generalization of these calculations:

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We do all historical average price calculations in terms of USD, then convert to your chosen display currency using the current rate on our sites and apps.
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We don’t include trading fees in average price or cost basis.
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We value all deposits, withdrawals and transfers at the time of the action, e.g. if you deposit BTC when the price is at 100,000 USD, we will apply that price when calculating the cost basis for the average entry price.
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Transfers to the futures wallet are considered withdrawals and create realized P&L. Transfers from futures to spot are considered deposits and are valued at the time of the action for cost basis purposes.
•
Earn rewards are also considered deposits and valued at the time of reward.

Profit and loss

Profit and loss (P&L) is a measure of how much your asset has gained or lost compared to your cost basis. P&L comes in two forms:

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Unrealized P&L: This reflects the potential profit or loss on assets you still hold in your balances. It helps you monitor current balance performance and decide whether to hodl, buy more or sell.
Unrealized P&L = current market value - cost basis = (current market price * balance) - cost basis
Unrealized P&L (%) = ( (current market price * balance) - cost basis) / cost basis
•
Realized P&L: This reflects the actual profit or loss you’ve made from selling an asset.
Realized P&L = (sell price - average price) * amount sold

Example:

•
As above, if you buy 10 ETH at 3,000 USD, your cost basis is 30,000 USD.
•
If ETH price goes up to 3,400 USD, your unrealized P&L becomes:
(3,400 * 10) - 30,000 = 4,000 USD
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If you sell 5 ETH at 3,400, you realize 2,000 USD of P&L – and your unrealized P&L drops to 2,000 USD, as this is the unrealized value of the ETH you still hold.

Notes:

As with cost basis, we’ve tweaked P&L calculations in Kraken Pro to make them more generally applicable and useful for all clients:

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Trading and funding fees are applied directly as realized P&L at the time the fee is charged.
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Closed spot margin positions realize P&L upon closure, but unrealized P&L for margin trades is calculated as described in How to calculate profits/losses from trading on margin. Non-USD P&L from closed spot margin positions will be treated as deposits and valued at time of realization for average price purposes.
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Derivatives unrealized P&L are also not included in this asset-based unrealized P&L but are included on the Derivatives tab, and are calculated as described Understand profit & loss calculations.

Usage

Cost basis and P&L can help you to evaluate your portfolio as follows:

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Track asset performance: By comparing the current value of your holdings with your cost basis, you can see which assets are growing in or losing value.
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Make informed decisions: Unrealized P&L can help you to decide whether to hold or exit a position, while realized P&L can be used to evaluate the success of past trades.

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