What Is the Difference Between Realized and Unrealized P&L?

Unrealized P&L is the profit or loss on an open position based on its current valuation.

Realized P&L is the profit or loss recorded when a position is closed, before or after costs depending on how the figure is reported.

This distinction matters when managing futures trades.

A position showing a large unrealized profit can still give back some or all of it before closing.

I focus on my exit plan and risk limits rather than treating an open profit as money already secured.