A realized loss in forex is the actual loss recorded when a trade is closed at a worse price than the entry. Unlike floating or unrealized losses, a realized loss is final. Once the position is closed, the loss is locked in and permanently reflected in the account balance.

Realized losses occur when a stop-loss is hit, a trader manually exits a losing trade, or a margin-based liquidation closes the position. At that moment, the difference between the entry price and the exit price, multiplied by position size and adjusted for spreads and fees, becomes a confirmed loss.

Understanding realized losses is important because they directly affect trading capital and future risk capacity. Every realized loss reduces available margin and can limit position sizing in subsequent trades. This is why disciplined traders focus more on controlling losses than chasing profits.

Realized losses are not necessarily a sign of poor trading. They are a normal part of forex trading. Even profitable strategies experience losses regularly. The key difference between successful and unsuccessful traders lies in how small and controlled those losses are relative to gains.

Managing realized losses involves using proper stop-loss placement, consistent risk percentages per trade, and avoiding emotional decision-making. When losses are planned and limited, they become manageable business expenses rather than account-damaging events. Over time, controlled realized losses allow traders to stay in the market long enough for their edge to play out.