What is Unrealized Gain?

What Is Unrealized Profit?

Unrealized profit refers to the on-paper gain or loss from an asset that has not yet been converted into actual cash, based on the difference between its current market price and your purchase cost. Also known as “floating PnL” (Profit and Loss), it fluctuates in real time as market prices change.

For example, if you buy 1 unit of Token A for $100 and its market price rises to $120, your unrealized profit is $20. If the price drops to $95, your unrealized loss is $5. These figures only become realized profit or loss once you actually sell the asset.

You’ll commonly find unrealized profit displayed on crypto exchanges under sections like “Floating PnL” in your asset page, or “Unrealized PnL (U)” within contract positions. Remember: these numbers represent estimated value changes, not actual cash in your account.

What’s the Difference Between Unrealized Profit and Realized Profit?

Unrealized profit represents potential gains or losses that exist only on paper, while realized profit reflects the actual financial result after a trade is closed. Realized profits impact your available balance and may trigger tax obligations.

Unrealized profit doesn’t directly increase your account’s cash balance—it’s simply the difference between current market value and cost. Realized profit arises when you sell or close a position, settling funds to your account and potentially incurring taxes (subject to local regulations).

Example workflow:

1. Buy 1 unit of Token A for $100.
2. Price rises to $120—unrealized profit is $20, but your balance remains unchanged.
3. Once you sell, the $20 becomes realized profit, updating your transaction history and available funds.

How Is Unrealized Profit Generated in Crypto Markets?

Unrealized profit is driven by changes in asset prices and does not require you to actively trade.

In spot trading, the value of your holdings fluctuates with market prices; the gap between current market value and purchase cost is your unrealized profit or loss.

In NFT markets, “floor price” (lowest sale price) is often used to estimate collection value. An increase in floor price results in unrealized profit, but this relies on market activity and liquidity.

For contract trading, unrealized PnL is calculated using “mark price”—a reference price set by platforms to reflect fair market value and avoid manipulation by extreme trades. The difference between mark price and your entry price determines unrealized PnL.

How Is Unrealized Profit Calculated in Spot and Contract Markets?

For spot trading, unrealized profit typically equals “current market value minus purchase cost.” Market value is “current price × quantity,” while purchase cost can be calculated using weighted averages for multiple buys.

Example: You buy 1 unit of Token A for $100, then another for $110. Your total cost is $210 for 2 units, making the average cost $105. If current price is $120, market value is $240, so unrealized profit is $240 − $210 = $30.

In contracts, unrealized PnL is generally “(mark price − entry price) × quantity,” also factoring in fees and funding rates. Funding rates are periodic payments in perpetual contracts to anchor prices; they gradually impact position PnL rather than being settled instantly.

Using leverage amplifies even minor price movements into larger unrealized gains or losses, which may trigger liquidation. Liquidation occurs when margin falls short, converting unrealized losses into realized losses immediately.

How to View and Reconcile Unrealized Profit on Gate?

Gate allows you to view unrealized PnL in both asset and contract position pages, and export records to reconcile cost and market value.

Step 1: Log in to Gate and check your asset overview or spot account for details on quantity, current value, and cost. Look for fields labeled “PnL/Floating PnL” (names may vary with product updates—refer to the current page).

Step 2: Go to spot position details, review buy history and average cost. Use “current price × quantity − total cost” to estimate unrealized profit and verify it against platform data.

Step 3: In contract accounts, check the positions page for “Unrealized PnL (U),” “Mark Price,” and “Entry Price.” Use (Mark Price − Entry Price) × Quantity for calculations, paying attention to funding rates and trading fees.

Step 4: Export transaction history or statements, compare individual buy prices and quantities with current valuations, and create your own cost ledger. This helps you track sources of unrealized profit as prices fluctuate.

Security Tip: Using leverage in contract accounts amplifies volatility—set stop-losses and maintain sufficient margin to avoid liquidation caused by expanding unrealized losses.

How Does Unrealized Profit Affect Taxes and Financial Reports?

In most jurisdictions, taxes are usually assessed on “realized profit,” not on unrealized gains. Rules vary depending on location and investor status.

Some accounting and fund management scenarios use “mark-to-market” valuation—reassessing holdings at market prices on reporting dates and listing unrealized profit in reports. However, tax calculation typically still relies on realized outcomes. Individual investors should follow local regulations.

Advice: Keep detailed cost records and transaction receipts; distinguish between realized and unrealized profits when reporting; maintain unified ledgers for assets across platforms and chains. For tax or compliance questions, consult local professionals.

What Are the Risks and Common Misconceptions About Unrealized Profit?

Unrealized profit does not equal cash—market downturns can quickly wipe out paper gains.

Common misconceptions include: relying too heavily on “floating PnL” for decisions while ignoring liquidity or order depth; over-leveraging in contract trades expecting unrealized profits to keep growing, only to be liquidated by sudden swings; treating unrealized profit as taxable income without considering local rules that require realized gains.

For NFTs or low-cap tokens, prices can be skewed by single trades, making unrealized profit less reliable than with highly liquid assets. For such assets, take-profit strategies and partial sales are more important.

Key Takeaways & Practical Recommendations About Unrealized Profit

Unrealized profit is the difference between current market price and purchase cost—common in spot trading, NFTs, and contracts. It does not equal cash nor directly change your account balance or tax liability; only after selling or closing a position does it become realized profit. In practice, maintain a detailed cost ledger, monitor “floating PnL” and contract “unrealized PnL” on Gate, and use simple formulas for verification to better manage positions. During volatility, combine take-profit/stop-loss orders, staged trading, and risk exposure management—respect the guidance value of unrealized profit but avoid being misled by short-term price swings. Tax rules vary by region; consult professionals if unsure.

FAQ

Are “Unrealized Profit” and “Unrealized PnL” the Same Concept?

Yes—they refer to the same thing in crypto trading. Unrealized profit (or Unrealized PnL) means the gain or loss shown on paper due to price changes of assets you hold, but these gains/losses aren’t locked in until you actually sell. Only when assets are sold do these figures become realized profit or loss.

Why Does My Unrealized Profit Show a Negative Number?

A negative unrealized profit means the price of your holdings has declined. For example: you bought a coin for 1,000 CNY but now it’s worth 800 CNY—you have an unrealized loss of 200 CNY (negative profit). You can choose to hold for a rebound or sell now to lock in the loss.

Should I Sell When My Unrealized Profit Is High?

A high unrealized profit doesn’t automatically mean you should sell—it depends on your investment strategy. If you’re confident about long-term prospects, you may hold for greater returns; if you’re concerned about a pullback or want to manage risk, consider selling some to lock in gains. Make decisions based on market trends, personal risk tolerance, and investment goals—don’t trade impulsively just because of attractive numbers.

Does Unrealized Profit Affect Margin When Trading Contracts on Gate?

Yes—unrealized profit directly affects your account equity and margin ratio. Positive unrealized profit boosts equity and margin sufficiency; negative values decrease them. If your margin ratio drops too low, the exchange may liquidate positions automatically. Monitor unrealized PnL closely and add margin if needed.

Why Does My Unrealized Profit Change Suddenly?

Unrealized profit fluctuates with real-time changes in asset prices—the more volatile or frequently changing the market, the sharper these swings. If you hold high-volatility assets (such as small tokens or leveraged positions), large price moves can cause rapid changes in unrealized profit. On Gate, you can view real-time charts to help you understand these dynamics better.