What is Unrealized P/L and Floating P/L?
Understanding Unrealized vs. Realized P/L in Forex Trading
In your trading platform, you’ll notice a figure labeled “Unrealized P/L” or “Floating P/L”—usually shown in red or green.
Let’s break down what this means and how it differs from Realized P/L, two important concepts every trader should understand.
What Is Unrealized or Floating P/L?
Unrealized P/L is the profit or loss on your open trades—those you haven’t closed yet. It’s called “floating” because it constantly changes as market prices move.
For example, if you’re long 10,000 units of EUR/USD at 1.15000 and the price drops to 1.13000, you’re down 200 pips or $200. This is an unrealized loss because the trade is still open.
But if the price moves in your favor, say to 1.16000, you now have an unrealized profit of 100 pips, or $100.
What Is Realized P/L?
Realized P/L is the profit or loss from trades you’ve closed. Once you exit the trade, the gain or loss is added to or subtracted from your account balance.
If you close a trade at a loss of $200, your balance drops by $200. If you close it at a profit of $100, your balance increases by $100.
Here’s the key: only closed trades affect your balance. Until then, any gain or loss is only theoretical.
Profit Isn’t Real Until It’s Realized
Unrealized profit is just “paper profit.” It can vanish in seconds if the market moves against you. Realized profit, however, is actual money—cash you can withdraw.
To put it in perspective: Think of an “unrealized spouse” you never proposed to. That missed chance? A realized loss—just like failing to close a profitable trade in time.
Summary
- Unrealized P/L: Profit or loss from open positions, still affected by market movements.
- Realized P/L: Profit or loss from closed trades, now reflected in your account balance.
Understanding the difference helps you manage risk and avoid emotional decision-making.
