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Definition of 'Unrealized Gain'
A profit that exists on paper, resulting from any type of investment. An unrealized gain is a profitable position that has yet to be cashed in, such as a winning stock position that remains open. A gain becomes realized once the position is closed for a profit. An unrealized loss, on the other hand, occurs when an investor is holding onto a losing investment, such as a stock that has dropped in value since the position was opened. A loss becomes realized once the position is closed for a loss. Unrealized gains and unrealized losses are often called "paper" profits or losses, since the actual gain or loss is not determined until the position is closed.
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