Ask the Institute

DATE:  September 10, 2012

QUESTION:
Can you explain in layman's terms what realized gains/losses and unrealized gains/losses are?

ANSWER:
A realized gain is the net amount of cash added to your trading account after closing a previously open position. A realized loss is the net amount of cash subtracted from your trading account after closing a previously open position. In other words, a realized gain or loss is the net result once you no longer have a position. In contrast, an unrealized gain or loss refers to the net change in account value prior to closing out a position. To learn more about realized and unrealized gains/losses, view this week's segment of "Ask the Institute."