Unrealized Gain/Loss
The profit or loss on an open position that has not yet been closed.

What Is Unrealized Gain/Loss?
This term refers to the potential profit or loss on an investment that you currently hold but have not yet sold. It reflects how much you would gain or lose if you were to sell the asset at its current market price.
How It Works
- Unrealized Gain: When the current market price of an asset is higher than the price at which you purchased it, you have an unrealized gain. This indicates that your investment is profitable on paper, but you haven’t locked in the profit by selling the asset.
- Unrealized Loss: Conversely, when the current market price is lower than your purchase price, you have an unrealized loss. This means you would incur a loss if you decided to sell the asset at that moment.
Example
- Unrealized Gain: Suppose you bought 10 shares of a company at $100 each, totaling $1,000. If the current market price rises to $150 per share, the value of your investment is now $1,500. Your unrealized gain is $500 ($1,500 - $1,000).
- Unrealized Loss: If the price instead falls to $80 per share, your investment is now worth $800. This results in an unrealized loss of $200 ($1,000 - $800).
Key Points
- Not Taxed Yet: Unrealized gains or losses do not affect your tax situation until you sell the asset and they become "realized."
- Market Volatility: The value of unrealized gains or losses can change rapidly with market fluctuations.
- Impact on Decision-Making: Investors often monitor their unrealized gains and losses when deciding whether to hold or sell an asset.
The Sum Up
In short, unrealized gains and losses show the potential profit or loss on your investments without having actually sold them, keeping your financial outlook flexible until you make a final decision.
Other terms in this Category.