Realized Profit/Loss

Realized Profit/Loss refers to a profit or a loss from a completed trade. Until you complete a trade, i.e. close a position, your Profit / Loss remains unrealized and can fluctuate (or “float”). By closing your position, you fix your profit or loss.

If you opened a position and later closed it with a gain, that is your realized gain. If you opened a position and had to close it with a loss (for example to prevent a further decrease of value), that is your realized loss. Both realized profits and losses get recorded in your income statement and, most likely, have a tax impact.