Realized Profit/Loss

What is realized profit/loss?

Realized profit or loss is the final, locked-in outcome of a trade once it has been closed. Up until that point, a trade only shows floating profit or loss — an unrealized number that can still change with the market. The instant a position is closed (manually, or automatically via a stop-loss or take-profit), that number stops moving and becomes realized: it’s added to, or subtracted from, the trader’s account balance.

A worked example

You open a short position on 1 micro lot of EUR/USD at 1.0900, where each pip is worth about $0.10. The price falls to 1.0850 — a 50-pip favorable move — and you close the trade. That 50-pip gain, roughly $5, is now a realized profit: it’s permanently credited to your account balance, regardless of what EUR/USD does next. Contrast this with an open trade still showing a “paper” gain of $5 — that figure remains floating and unconfirmed until closed.

Why realized P/L matters

Realized P/L is the number that actually reflects a trader’s track record, because it can’t be reversed by a subsequent market swing the way floating P/L can. It’s what most trading journals, tax reporting, and performance-review processes are built around — separating “what I actually made or lost” from “what a trade happens to be showing right now.” Understanding this distinction also helps explain why equity (balance plus floating P/L) and account balance (realized P/L only) can diverge significantly while trades are still open, and why closing a position is the moment that truly settles the outcome.

Past realized results do not guarantee future performance, and trading carries risk of loss. This article is educational and not financial advice.