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"Unrealized" vs. "Realized" in Trading Explained - YouTube
Channel: ClayTrader
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so when do you actually make or lose
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money in the market when does that
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happen
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that's what I want to talk about in
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today's video so right off the bat I'm
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just going to throw some trading
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terminology at you investing terminology
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at you and we're going to break down
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what these words mean because at the
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core and I get this question quite a bit
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and to me it's obvious but I have to
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remember that I've been trading for like
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a decade now so I got it when I put
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myself in a new person shoes oh yeah I
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can see why people would ask that what
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the terminologies here are unrealized
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first realize these are the two terms
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that need to be focused on are the two
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terms are going to answer that question
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of when you actually make money when you
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actually lose money in the market so the
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way things work and you know who knows
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maybe you're in a position right now is
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you went and everything has a start
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right whether that's a start of a trade
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a start of investment but there's a
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start so you go you hit click or maybe
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tap if you're doing a phone and in this
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case we'll just say you buy and then
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time starts to unfold so time time time
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is unfolding unfold and unfolding and
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during this maybe the stock you bought
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goes up maybe it goes down goes down
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some more then goes up and while all
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this is happening you maybe think oh wow
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I it's showing me that I have this
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amount of money oh okay now I have less
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money and it's fluctuating back and
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forth back and forth during this part of
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time while things are unfolding this is
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where the term unrealized comes into
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play meaning your gains that are showing
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the money that you've made but you
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haven't made it or the losses we're
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showing you're losing money but you
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haven't actually lost it because it's
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all unrealized
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time is still unfolding the trade is
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still in progress the investment is
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still in progress
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so again if you want to look at this is
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unreal eyes or in progress so that's
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what unrealized means is when the trader
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investment is unfolding is in progress
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of happening well then those are
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unrealized gains so just because it
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shows wow I I made $100 well not really
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you don't really make it because things
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are still in progress to be fair that
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hundred dollars could go up to $150 or
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it could drop to now you're losing $25
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the point here is fluctuation when the
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history of your investment or trade is
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unfolding is in progress of happening
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that is where the term unrealized gains
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or losses comes into play maybe your
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platform has that very same terminology
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where it says unrealized and realized
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that is what's going on with the
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unrealized gain but eventually at some
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point in time what's going to happen
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well it's going to end now again this
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time if you're a day trader who knows
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this could be you know 30 seconds if
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you're a long-term investor doing a
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retirement this could be 40 years I
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don't know what it is but a bunch these
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things are going to end and again you're
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going to click who knows maybe this is
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like 50 years from now all you'll have
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to do is think it and this will happen I
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don't know but at the time this video we
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still have to tap and click things but
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you're going to click to sell at this
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point in time is anything in progress
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anymore no why is it in progress well
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it's ended so this is where things now
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become realized meaning it is what it is
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now you've officially made the money so
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going back let's say you you know right
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here you're up $100 up $100 you know
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like I want $100 click and nothing more
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is in progress you have $100 now you
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have literally made that hundred dollars
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where if you wanted to you could take it
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from your brokerage account and go put
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it into your checking account for
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example whereas if you're you know if
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it's saying you're down twenty-five
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dollars and you know what I don't want
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to lose any more you click to end the
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trade now you have lost $25 officially
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but during the you know the time where
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the trade is in progress it could show
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that you're down a whole lot of money it
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could
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show that you're up a whole lot of money
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but at that point in time there is
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nothing you can do to pull out and put
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it into your checking account you have
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to end the trade and the investment in
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order to pull money out so that is what
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realized verse or unrealized verse
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realized is that is how you make or sell
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or make or lose money in the market you
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have to actually end the trade which is
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selling and then that money is made or
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lost like I said this question has come
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up quite a bit so hopefully this does a
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sufficient job of answering when exactly
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what is actually occurring that allows
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you to make or lose money if you are
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interested in trading alongside me and
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other traders then I do offer a private
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trading community known as the inner
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circle so the two images that you see on
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the screen the one image if you click on
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it it will take you to the inner circle
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page and give you all the details about
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it the other is going to be a
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behind-the-scenes tour that I personally
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give so you can see exactly what you are
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going to get with the subscription so if
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that sounds like something that could
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add value to you as a trader then go
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ahead check it out and by all means let
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me know if you have any questions
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