Unrealized profit and loss
Family III · Risk
Not to be confused with floating profit and loss, realized profit and loss, average win loss ratio.
Unrealized profit and loss is the running gain or loss on a position that has not been closed, calculated from the difference between the entry price and the current market price. It is also called paper profit or loss because it exists only on the account statement, not in settled cash. The figure changes with every price movement until the position is closed.
How it is calculated
For a long position, unrealized profit and loss equals the current price minus the entry price, multiplied by the position size. For a short position, the order is reversed: entry price minus current price, multiplied by size. The result is expressed in the quote currency of the instrument unless converted.
Because the current price is a live quote, the figure is recalculated continuously. It is not a final amount and cannot be withdrawn while the position remains open.
Worked example
The +900.00 is unrealized: it becomes realized only when the position is closed at a price that produces that result.
What changes it
Unrealized profit and loss moves with the market price of the open position. It is also affected by any costs that a broker deducts from the running figure, such as commissions or financing charges; the treatment of these costs varies by broker and by instrument. Some platforms show unrealized profit and loss separately from these costs, while others net them into a single number.
Margin requirements may be calculated against the unrealized figure, so a large unrealized loss can reduce available margin even though no cash has left the account.
Often confused with
- floating profit and loss
- Floating profit and loss is the same running figure under a different name, so the two terms are interchangeable; the visible sign is that neither has been closed, meaning no cash has been settled.
- realized profit and loss
- Realized profit and loss is the final amount booked after the position is closed, so it no longer changes with the market; the visible sign is that it appears as settled cash rather than a running figure.
- average win loss ratio
- The average win loss ratio is a performance statistic that divides the mean profit of winning trades by the mean loss of losing trades over a chosen period, expressing how much the typical winner earns relative to the typical loser.