Floating profit or loss refers to the unrealized gain or loss of an open position. As long as a position has not been closed, this value continuously changes with the current market price.
A floating profit occurs when the current price is more favorable than the entry price—for a long position, this means the price is above the purchase price. A floating loss occurs when the price has moved in the opposite direction.
The floating value is crucial for determining a trading account’s equity, which is calculated as balance plus floating profit or minus floating loss.
Monitoring open profits and losses is an essential part of ongoing risk management and influences decisions on whether to hold, hedge, or close a position.
