What is an Unrealized Gain/Loss?
Definition of Unrealized Gain/ Unrealized Loss: It is defined as a hypothetical profit or loss on the Open position which is valued at the rates of current market, as founded by the trader or by the broker for assessing the outstanding danger. This figure is calculated by taking the existing market value for the post and subtracting its book value. Unrealized losses or gains play the role of losses and profits for the purpose of tax reporting whenever the position is closed or liquidated. For instance, if the Forex trader moves a long way on the Euros and is appreciated by the market, he is considered as a paper profit in his post. Paper profits are not generally taxable, recordable and until it is realized, they are even not permanent also. The foreign market is volatile, and unrealized profits can disappear instantly. For such reason, future investments in the overseas exchange are not advised because of the unpredictability of the general fundamentals that influences the market.