What does “Unrealized” mean in trading?

(Unrealized Profit/Loss)

You often hear in trading the phrase:

“Unrealized Loss” or “Unrealized Profit”

But what does it actually mean?

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Simply explained:

• “Unrealized” means that the trade is still open and has not yet been closed.

• The profits or losses you see now are not final and can change at any moment.

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Quick example:

• You bought 1 Bitcoin at a price of $50,000

• The current price is $55,000

• Profit +5,000$ = Unrealized Profit

But what if the price suddenly drops to 48,000$ ?

The profit turns into an Unrealized Loss!

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When does it become “Realized”?

Only when you close the trade (sell or reverse buy), does the profit or loss get recorded in your account and it becomes:

Realized Profit/Loss (Realized)

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Summary:

Unrealized = on paper only

Realized = the trade is closed and that's it

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