Direct answer: realized vs unrealised forex gain loss
In forex accounting and performance measurement, realized forex gain/loss is the FX result you recognize after a position is closed. Unrealised forex gain/loss is an estimate of the FX result based on the current (or chosen valuation-date) exchange rate while the position remains open.
Explanation: how the two are determined
A “forex position” typically involves exchanging one currency for another (for example, a long exposure to one currency financed in another). The key idea is that FX impact can change when exchange rates move.
Realized forex gain/loss
Realized forex gain/loss reflects the difference between:
- the exchange rate (or converted value) at entry (when the position was opened), and
- the exchange rate (or converted value) at exit/closure (when the position is closed).
Because the position is closed, there is a concrete conversion outcome. That is why realized results are generally easier to verify: they are tied to completed trades and settlement/close values.
Unrealised forex gain/loss
Unrealised forex gain/loss is calculated while the position is still open by comparing:
- the converted value at entry, and
- the converted value using a valuation rate at a given date.
This valuation rate can be the market rate at measurement time or another rate defined by your system. Since the position is not closed, unrealised figures can change from day to day as exchange rates move.
Example checks and practical verification
Consider an open position measured at two different times:
- If the valuation date exchange rate moves in your favor, the unrealised forex gain tends to increase.
- If it moves against you, the unrealised forex loss tends to increase.
Once you close the position, the realized result should align with the final conversion outcome for that closure. A useful check is to compare:
- the realized gain/loss over the closed period, with
- the earlier unrealised estimate at the prior measurement date,
and verify that any difference is explainable by the exchange-rate movement between the valuation dates.
Relevant limitations and risks
- Unrealised values are not final. They are estimates tied to a chosen valuation date and rate, so they can reverse without changing your entries.
- Definitions vary by system. Measurement may depend on how a platform or report defines entry conversion, valuation rate source, and timing.
- Currency and direction matter. The sign (gain vs loss) depends on which currency you are effectively long/short and how the system converts.
- No future result can be inferred. Unrealised numbers do not predict what will happen after closure; realized outcomes depend on the eventual closing rate.
If you track average win/loss
Within an “average win loss” style review, realized and unrealised amounts can be treated differently depending on whether your performance metric is based on closed trades (often realized) or marks-to-market (often unrealised). For verifiability, apply the same definition consistently across your dataset and clearly label the measurement rule (entry/exit vs valuation date).