Reading Your Portfolio: Cost Basis, Unrealized and Realized Gain

The portfolio screen holds several important numbers, and understanding what they mean helps you read your performance correctly without jumping to conclusions. Cost Basis is the total amount you actually paid to buy the share, including the share price plus fees and commissions. This number is the baseline for measuring your performance. Unrealized Gain/Loss is the profit or loss calculated only on paper, as long as you still hold the share and have not sold it. This number keeps changing as the price changes, and it does not represent an actual gain or loss until that point. Realized Gain/Loss, on the other hand, is the actual profit or loss that is locked into your balance after a sell order fully executes. This difference between "on paper" and "actual" is very important for understanding your real financial position.

Illustrative example

Suppose you bought shares in a fictional company with the symbol DEMO_TECH at an illustrative cost basis of {workedExampleTradeKwd} (in your funding currency). If its market value now rises, your portfolio shows an unrealized gain. If you later sell those shares at a higher price, that gain becomes a realized gain. This is an illustrative example with placeholder numbers only.

Common mistake

Some beginners confuse unrealized gain with realized gain, acting as if the profit shown on paper is already cash in hand. An unrealized gain can change or disappear entirely before you actually sell.

Quick check

1. What is cost basis?

   The total amount you paid to buy the share, including fees — it is the starting point for calculating any later gain or loss.

2. When does a gain turn from unrealized into realized?

   When a sell order actually executes — because selling is what locks the gain or loss into your cash balance.

3. Will an unrealized gain always stay the same until you sell?

   No, it is not guaranteed to stay — it can change or disappear before you sell, because it is based on a market price that keeps changing.

This content is educational only and is not investment advice.

Try it: Open the portfolio screen and notice the difference between a holding's current value and its cost basis (screen: IW-04).