diff --git a/lib/drift/orders.ts b/lib/drift/orders.ts
index 458e9ff..ccd09e8 100644
--- a/lib/drift/orders.ts
+++ b/lib/drift/orders.ts
@@ -527,10 +527,18 @@ export async function closePosition(
       console.log('🧪 DRY RUN MODE: Simulating close order (not executing on blockchain)')
       
       // Calculate realized P&L with leverage (default 10x in dry run)
-      const profitPercent = ((oraclePrice - position.entryPrice) / position.entryPrice) * 100 * (position.side === 'long' ? 1 : -1)
+      // For LONG: profit when exit > entry → (exit - entry) / entry
+      // For SHORT: profit when exit < entry → (entry - exit) / entry
+      const priceDiff = position.side === 'long' 
+        ? (oraclePrice - position.entryPrice)  // Long: profit when price rises
+        : (position.entryPrice - oraclePrice)  // Short: profit when price falls
+      
+      const profitPercent = (priceDiff / position.entryPrice) * 100
       const closedNotional = sizeToClose * oraclePrice
-      const realizedPnL = (closedNotional * profitPercent) / 100
-      const accountPnLPercent = profitPercent * 10 // display using default leverage
+      const leverage = 10
+      const collateral = closedNotional / leverage
+      const realizedPnL = collateral * (profitPercent / 100) * leverage
+      const accountPnLPercent = profitPercent * leverage
       
       const mockTxSig = `DRY_RUN_CLOSE_${Date.now()}_${Math.random().toString(36).substring(7)}`
       
@@ -578,8 +586,13 @@ export async function closePosition(
     console.log('✅ Transaction confirmed on-chain')
     
     // Calculate realized P&L with leverage
-    // CRITICAL: P&L must account for leverage and be calculated on USD notional, not base asset size
-    const profitPercent = ((oraclePrice - position.entryPrice) / position.entryPrice) * 100 * (position.side === 'long' ? 1 : -1)
+    // For LONG: profit when exit > entry → (exit - entry) / entry
+    // For SHORT: profit when exit < entry → (entry - exit) / entry
+    const priceDiff = position.side === 'long' 
+      ? (oraclePrice - position.entryPrice)  // Long: profit when price rises
+      : (position.entryPrice - oraclePrice)  // Short: profit when price falls
+    
+    const profitPercent = (priceDiff / position.entryPrice) * 100
     
     // Get leverage from user account (defaults to 10x if not found)
     let leverage = 10
@@ -593,9 +606,10 @@ export async function closePosition(
       console.log('⚠️ Could not determine leverage from account, using 10x default')
     }
     
-    // Calculate closed notional value (USD)
+    // Calculate closed notional value (USD) and actual P&L with leverage
     const closedNotional = sizeToClose * oraclePrice
-    const realizedPnL = (closedNotional * profitPercent) / 100
+    const collateral = closedNotional / leverage
+    const realizedPnL = collateral * (profitPercent / 100) * leverage  // Leveraged P&L
     const accountPnLPercent = profitPercent * leverage
     
     console.log(`💰 Close details:`)