What does float loss mean?
2023-05-29
Summary:
Floating losses are only virtual losses that exist before an investment or transaction is realized, because if the investment or transaction rises above its purchase price in the future, the loss will not be realized and is usually related to holding risk.
Floating loss refers to the potential loss of holding an investment or transaction when the current market value of the investment or transaction is lower than its purchase cost. In other words, this loss is only a virtual loss that exists before the investment or transaction is realized, because if the investment or transaction rises above its purchase price in the future, the loss will not be realized. Floating losses is usually related to holding risk, as if an investor sells the investment or transaction at the current price, they may lose some or all of the investment.
Introduce this stock knowledge point with a simple example:
You bought a share of ABC Company's stock for 10 yuan per share yesterday. At the close of the day, the closing prices of ABC Company's stock was 9 yuan, but you did not sell your holdings of ABC Company's stock. Therefore, you have a floating loss of 1 yuan today because the stock price is constantly fluctuating and there is a possibility of an increase. If the stock of ABC Company rises to $12 a week later and you haven't sold it yet, your profit is also uncertain because there is still a possibility of a price drop. It can be said that you have a floating profit of $2. As long as you do not sell the stocks you hold, the profits or losses formed by the rise or fall off the stock price are uncertain. Only when you sell the stocks you hold, are the actual losses or profits. The same applies to other financial products.
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