The short answer is—you have an unrealized loss also known as a “paper loss.” If you purchased a stock or other investment at a certain price and it’s down from your initial purchase price, you have an unrealized loss. On “paper” it shows your stock has decreased in market value.
If you purchased 10 shares of XYZ stock for $10 per share, your total cost excluding commission was $100 (10 x $10).
If you are still holding the 10 shares of XYZ and the stock price goes down to $8, your total market value is $80 (10 x $8). You have an unrealized or paper loss of $20 ($100-$80).
As long as you still own the stock, your loss is unrealized. Technically, you have not been affected by the loss. That ALL changes when you sell the stock.
Using the same example, if you sell the 10 shares of XYZ for $8, then you have a realized loss of $20. It’s no longer an unrealized loss on paper; it has been realized.
Although this example illustrates a loss, it is the same for gain. Once you sell the stock, you will either have a realized gain or loss
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