Unrealized P&L definition

Unrealized Profit and Loss (P&L) in trading refers to the gains or losses on open positions, that is, trades that an investor has not yet closed.

Here’s a breakdown:

Unrealized Profit (Paper Profit): An investor has purchased an asset, and its market price has increased, but the asset has not been sold. The gain exists on paper but has not been locked in.
Unrealized Loss (Paper Loss): An investor has purchased an asset, and its market price has decreased, but the position remains open. The loss is not yet realized, as the asset has not been sold.

Example:

An investor buys 100 shares of a stock at $50, totaling $5,000.
The stock rises to $55.
The unrealized profit is (55 – 50) × 100 = $500.

If the stock drops to $45 instead:

The unrealized loss is (45 – 50) × 100 = –$500.

Once the asset is sold, the unrealized P&L becomes realized, meaning the profit or loss is actual and reflected in the investor’s account balance.

In Interactive Brokers’ Trader Workstation (TWS), Unrealized Profit and Loss (P&L) represents the current profit or loss on open positions, reflecting potential outcomes if those positions were closed at the current market prices.

Within the TWS platform, Unrealized P&L is calculated as the difference between the current market value of a position and its average purchase price. This metric is displayed in the Account Window and can be configured to show both value and percentage terms.

It’s important to note that Unrealized P&L remains theoretical until the positions are closed, at which point it transitions to Realized P&L, accounting for actual profits or losses including any associated fees and commissions.

Unrealized P&L

Here’s a breakdown:

Example:

Information on Other Interactive Brokers Affiliates

Interactive Brokers Canada Inc.

Interactive Brokers Australia Pty. Ltd.

Interactive Brokers Hong Kong Limited

Interactive Brokers India Pvt. Ltd.

Interactive Brokers Securities Japan Inc.

Interactive Brokers Singapore Pte. Ltd.

Here’s a breakdown:

Example:

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