In any stock market transaction, a trade only happens when a buyer and a seller agree on a price. The prices at which buyers are willing to buy and sellers are willing to sell are visible in the Market Depth (Order Book). A trade executes only when both sides match, and that price becomes the Last Traded Price (LTP).

However, LTP is just the last executed price — it doesn't guarantee your next trade will execute at the same level. The actual price at which your order executes depends on market depth at the time of placing your order.


Why Traditional P&L Can Be Misleading ?

Traditionally, your Profit & Loss (P&L) is calculated using this formula:

P&L = (LTP – Buy Price) × Quantity

This method assumes your position can be exited at LTP, which may not be possible due to a gap between LTP and actual bid/offer prices.


Example

Let’s say you're tracking MRF:

  • LTP = ₹1,36,135

  • Best Seller in Market Depth is offering at ₹1,36,185

  • You place a buy market order → It executes at ₹1,36,185, not LTP

  • Price Difference = ₹50 more than expected

This difference can affect the real outcome of your trade, especially in high-value or low-liquidity stocks.


What is “P&L Based on Market Depth”?

The P&L Based on Market Depth feature helps solve this issue by calculating your P&L based on actual available bids and offers, not just the LTP.

It shows the realistic P&L you would get if you exited your position immediately using a market order, based on the best available price in the market depth.


How It Works

Instead of assuming you can exit at LTP, this feature:

  1. Looks at the best available price in the market depth (Bid if you're selling, Offer if you're buying)

  2. Uses that as your potential exit price

  3. Calculates your true P&L based on this execution price

Example

You bought 1 quantity of MRF at ₹1,36,000

  • LTP = ₹1,36,135

  • Best Buy (Bid) Price = ₹1,36,100

If you sell now via a market order, it will execute at ₹1,36,100 — not ₹1,36,135.

  • Traditional P&L = ₹135 profit (LTP – Buy Price)

  • Market Depth P&L = ₹100 profit (Best Bid – Buy Price)



Why Use This?

  • Get accurate, real-world P&L based on true liquidity

  • Make better exit decisions during intraday trading

  • Avoid false sense of profit/loss due to LTP illusion

Especially useful for low-volume or volatile stocks



How to use it

You can enable the P&L based on Market Depth in your position settings.