Gain or loss on trades still live:it isn't yours until you close and leave.
The profit or loss on an open position that has not yet been closed.
Unrealised P&L fluctuates with the market and only becomes realised (actual) when the position is closed.
In plain words
Unrealised profit and loss (P&L) is the gain or loss an open position would produce if it were closed at the current price. It changes with every price move and becomes realised, meaning fixed and added to or taken from the account balance, only when the position is closed.
See it move
Equity and Balance are drawing apart
Why it matters
Unrealised P&L is the difference between an account’s balance and its equity, and it is equity that margin calculations use. An open loss therefore reduces the room available for other positions even though nothing has been closed.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
An account has a balance of 5,000 US dollars, and the trader buys one standard lot of EUR/USD at 1.1000.
- 1Price at 1.103030 pips up, so unrealised P&L is +300 and equity is 5,300.
- 2Price at 1.098020 pips down, so unrealised P&L is −200 and equity is 4,800.
- 3Throughout, the balance stays at 5,000 because nothing has been closed.
If the trader closes at 1.0980, the loss of 200 US dollars is realised and the balance becomes 4,800.
A common mistake
An open loss is sometimes treated as not real until the position is closed. It is real for the account: it lowers equity and free margin at once, and it can lead to a margin call or a stop out.
Check yourself
Educational information, not investment advice or a recommendation to trade.