How to calculate floating profit and loss? Understand unrealized gains and losses so you're not afraid of losing money.

You just bought an asset, but haven’t sold it yet. If the price changes at this moment, do you have a mental doubt—am I making a profit or a loss right now? This ambiguous account is called Unrealized Profit and Loss.

What is Unrealized Profit and Loss? In simple terms

When holding an asset, it is the theoretical profit or loss calculated based on the current market price. As long as you haven’t closed the position by selling, this profit or loss remains in an “unrealized” state. Every time the price fluctuates, this number changes.

An actual example

Suppose you buy a certain coin for 1000 yuan, and now the market price rises to 1200 yuan:

• Your Unrealized Profit = 200 yuan (profit on paper now)
• If you choose to close the position now and sell, this 200 yuan becomes Realized Profit

Conversely, if the price drops to 800 yuan:

• Your Unrealized Loss = 200 yuan (loss on paper now)
• As long as you haven’t sold, the loss is just a number on the account

What’s the difference between Unrealized and Realized?

Unrealized Profit and Loss is just a floating theoretical number that changes with market fluctuations. You can choose to close the position at any time to lock in profits or losses.

Realized Profit and Loss is actual money. Once you press the sell button, this profit or loss becomes a real result that cannot be changed.

Practical use in trading

Tracking unrealized profit and loss helps you:

• Understand the floating status of your holdings at any time
• Decide whether to take profit or cut losses
• Evaluate the overall performance of your investment portfolio
• Avoid panicking and making rash decisions due to sudden market volatility

In simple terms, unrealized profit and loss are the gains or losses you haven’t cashed out yet. It reminds you of the current market situation, but the final result will only be confirmed after you actually close the position.