Net Realized Profit

Net realized profit is the final financial gain or loss remaining after all costs and deductions have been subtracted from the gross proceeds of a closed position. It represents the actual amount of capital added to a trader's account after accounting for trading fees, slippage, funding payments, and taxes.

Unlike unrealized profit, which exists only on paper while a position is open, realized profit is confirmed upon closing the trade. This metric is the primary indicator of a trading strategy's effectiveness and long-term sustainability.

Calculating net realized profit requires meticulous record-keeping of every cost incurred throughout the trade's lifecycle. It is the baseline figure used for calculating performance metrics like the Sharpe ratio or return on equity.

Traders often analyze their net realized profit to identify patterns in their trading behavior and refine their risk management processes. It is the bottom-line metric for any professional trader or investment fund.