A realized gain is the profit you lock in when you close a position for more than it cost, as opposed to a paper gain that can still change while you hold.
Last reviewed 18 November 2025 · Educational, not advice
A realized gain is profit that has actually been locked in. You realize a gain when you close a position for more than it cost you, either by selling the contract to someone else at a higher price than you paid, or by holding it through to settlement and receiving a payout above your cost. The key word is closed. Once the position is gone, the gain is settled and no longer moves with the market. It is yours, subject to fees and to whatever rules apply where you live.
The opposite is an unrealized gain, which is profit that exists only on paper while you still hold the contract. If you buy at forty cents and the price rises to sixty, you are showing an unrealized gain of twenty cents per contract, but you have not captured it. The price can fall back, or the contract can settle at zero, and that paper profit can disappear entirely. An unrealized gain is a snapshot of where you stand right now, not money in hand. Only by closing the position do you turn it into a realized gain.
The same logic applies to losses. An unrealized loss is a paper loss you can still recover from if the price moves back. A realized loss is locked in once you close at a price below your cost. Traders often track realized and unrealized figures separately so they can see both what they have actually banked and what is still exposed to the market. The two together make up your overall profit and loss.
The distinction matters for clear thinking about risk. Treating an unrealized gain as if it were already won can lead to holding too long or staking more than is wise. A gain is not real until the position is closed. It also matters for record keeping. Realized gains and losses are the events that have actually happened in your account, so they are usually the figures that matter when you total up your activity over a period, whatever the rules in your region require you to do with them.
On tax, treatment depends entirely on your country and your personal circumstances, and the rules can change. As of November 2025 we cannot tell you whether or how a realized gain is taxed for you, and nothing here is tax advice. What helps everywhere is keeping accurate records of every trade, including dates, prices, sizes, and fees, so that you or a qualified professional can work out the position correctly. If tax may apply to your trading, speak to a licensed tax adviser about your own situation.
You buy thirty contracts at forty cents, a cost of twelve dollars. The price rises to sixty cents, so you are showing an unrealized gain of six dollars, but you have captured nothing yet. If you sell all thirty at sixty cents, you receive eighteen dollars and your realized gain is six dollars before fees. If instead you keep holding and the price slips back to forty before settlement, the paper gain is gone and there is nothing realized.
Illustrative only. Numbers are examples, not a quote or a prediction, and exclude fees.
A paper gain is not money in hand and can vanish before you close. Do not stake more on the strength of profit you have not realized. Prediction markets can lose you money. Stake only what you can afford to lose, never to chase a loss, and never on borrowed money. In the United States you can call or text the helpline on 1-800-GAMBLER or visit ncpgambling.org.
A realized gain is the profit you actually lock in when you close a position, by selling a contract or by holding it to settlement, for more than it cost. Until you close, any profit on paper is unrealized and can still change.
An unrealized gain is profit that exists only on paper while you still hold a position. It moves with the price and can disappear. A realized gain is locked in once you close the position, so it no longer changes with the market.
Tax treatment depends entirely on your country and personal situation and can change. As of November 2025 we cannot give tax advice or state a rule that fits everyone. Keep clear records of your trades and consult a qualified tax professional about your own position.
It tells you what is actually yours. An unrealized gain can vanish before you close, so treating it as money in hand is risky. A realized gain is settled, which also makes it the figure that matters most for record keeping.
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