What do floating profits and losses mean?


Floating profit and floating loss

Floating profit refers to the profit seen on the book, that is, the cost is lower than the current market price. However, due to the fact that the securities or assets held have not been sold off, no profit can be obtained from the market, so it can only be called floating profit. Floating loss also refers to the fact that your cost is higher than the current market price on the book. If you close the position, it will become a real loss.

For example: you bought a share of ABC company with 10 yuan / share yesterday. The closing price of ABC company's stock at the end of today is 9 yuan. However, you did not sell your shares of ABC company. Therefore, you will have a floating loss of 1 yuan today, because the price of the stock is constantly fluctuating and may rise. If the stock of ABC company rises to 12 yuan after a week, and you haven't sold it, then your profit is uncertain, because the price may fall. You can say that you have a floating profit of 2 yuan. As long as you don't sell your stock, the profit or loss caused by the rise or fall of stock price is uncertain. Only when you sell the stock, is the real loss or profit.

Cash in floating profit

Cashing floating profit refers to the situation in which a large number of funds in fund accounts are redeemed for cash, which is the overall profitability of the fund. Taking the monetary fund as an example, there are two kinds of situations in which floating profits are cashed out on the basis of goods: one is passive cashing, in case of large-scale redemption; the other is active cashing, which may be the change of views on the bond market and the re change of asset allocation.

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