What it is:
Realized gains are increases in the value of an paper profit -- a paper profit only turns into a realized gain when you actually sell the security.that has been sold. This concept is the opposite of
How it works (Example):
Let's assume you own 100 shares of Company XYZ that you purchased for $1,000. If the value of the increases to $5,000 but you sell the shares, your realized gain equals $4,000.