What’s the Difference Between Unrealized Gain and Unrealized Loss

What’s the difference between unrealized gain and unrealized loss?

Answer: An unrealized loss occurs when you hold onto a losing investment like a stock that has dropped in value since you bought it. Similar to an unrealized gain, a loss becomes realized when  you sell the investment for a loss. Unrealized gains and unrealized losses are often called paper profits or paper losses since the actual gain or loss is not determined until the investment is sold.

As the market fluctuates, an investment with an unrealized gain may eventually turn into a position with an unrealized loss or vice versa. An unrealized gain occurs when the price of an investment is higher than the price the investor initially paid for the investment.