One event, two ways of bookkeeping, three utterly different psychological states. Everyone who trades Ts eventually has to pass through this gate.
1. A Scenario That Makes You Doubt Everything
On July 23, RGTI dropped to around $15.55. You decide it is a good level and buy 100 shares for a T.
On July 27, the stock bounces to $15.79. You sell — and by the books in your head: bought at $15.55, sold at $15.79, this one made about +$22 (a bit over $24 gross, minus round-trip fees).
Then you open the activity statement —
Realized loss: -$424.15.
You freeze.
It obviously made twenty-some dollars — where did 424 come from? Is the broker robbing you? Did the system get the math wrong?
No. The books are not wrong — it is that you never noticed the underground river between unrealized and realized losses. Only this time, it flowed in reverse.
2. Breaking Down the Actual Fills
The trade below actually happened on my account; every number comes from the Interactive Brokers fills (FIFO basis — the figures will diverge from the “weighted average price” basis shown in your positions table).
Position before the T:
- Earliest batch: 200 shares bought 5/11 @ $20.02 (100 of them sold on 7/9)
- The batch bought back on 7/9: 100 shares @ $16.96
- 200 shares held in total, blended cost about $18.50; spot $15.55 → unrealized loss about -$590
The T, step by step:
| Step | Action | Price | Result |
|---|---|---|---|
| 1 | 7/23 buy 100 shares | $15.55 | the account becomes 300 shares |
| 2 | 7/27 sell 100 shares (FIFO) | $15.79 | settles the oldest $20.02-cost lot |
Interactive Brokers defaults to FIFO (first in, first out) — what you sold was not the 100 shares you just bought, but the queue-head, highest-cost 100 shares on the books:
| The settled 100-share old lot | The remaining 200 shares | |
|---|---|---|
| Cost | $20.03 | 100@$16.96 + 100@$15.55 |
| Sale price | $15.79 | — |
| Realized loss | -$424.15 🔴 | — |
| New blended cost | — | ≈$16.26 |
And there is the surreal statement: the T made $22, and the report shows a $424 loss.
3. The Nature of an Unrealized Loss: You Bought a “Regret Option”
Unrealized loss = the loss amount + a time option.
The value of that option lies in one question — “what if it comes back?”
On 7/23 you did not sell; the unrealized loss on the books was just a paper number:
- The hope of a rebound: the moment it climbs back to $18.50, the unrealized loss goes to zero and nothing ever happened
- The right to procrastinate: no need to face the fact “I bought wrong” right now
- The comfort zone of self-deception: you can tell yourself “it is not a loss until I sell”
And the 7/27 sale crystallized the earliest batch’s $20.02 cost — the most expensive chunk of the unrealized loss went from a paper number to a certain fact, written into your trading record. The two cheaper batches ($16.96, $15.55) stayed on the books, and the most glaring red on the statement now has a receipt.
4. The Sweet Illusion of a Lower Cost
After the sale, 200 shares remain, and the blended cost “drops” from about $18.50 to about $16.26 — much prettier numbers:
- Unrealized loss rate: about -16% → about -4%
- The breakeven target: $18.50 → $16.26 — it feels easier to reach
But this was purely bought with your own money.
What you paid was a $424.15 realized loss, in exchange for the cost number dropping $2.24. Like moving a bill from one drawer to another — the debt has not disappeared; it just changed face.
Selling high-cost shares at a loss to lower the average cost is, in essence, buying a prettier averaged-down figure with a realized loss. Like a credit-card cash advance paying off a credit card — the total debt is unchanged; only the statement changed.
5. So Is a T Trade Actually Worth It?
It depends on what that money did after you sold.
If it was only to make the cost number look better, then it was money spent on psychological comfort — a pure loss.
But if the money came out and:
- became a premium-rich CSP (NOK, say), earning real time value every week
- or simply let you sleep at night — the mental wear saved is itself worth something
then “take the loss → take the cash → put it somewhere better” is a completely rational move. You just have to face one thing honestly: did you stop out because the underlying turned bad, or because you could not stand the grind of the unrealized loss?
6. The Flip Side: The T’s Profit Is Invisible on the Statement Too
This time it is the reverse version: the T clearly made about $22, and the statement shows none of that “gain” — only the red -$424.15.
Because in the FIFO world, “the 100 shares I just bought” has no identity. It only knows the queue head: whoever came in first goes out first. Your $22 does not show up as ”+$22” — it hides inside “those 100 shares you are holding have a lower cost than you thought.” Invisible, but real.
This is the most easily missed lesson of T trading: you must account not only for your own in-out spread, but for which chunk of your position FIFO will dig out to settle.
7. The Core Logic in Four Lines
1. The “realized” on a statement is not necessarily this trade’s P&L
The T made $22; the statement records the old lot’s -$424.15. Two sets of books — do not read them as one.
2. Unrealized vs realized is, at bottom, option value vs certainty
An unrealized loss keeps the hope of “it might come back”; realizing gives up the hope in exchange for certain cash and a certain record. FIFO will make that choice for you without asking.
3. A lower cost ≠ you made money
The cost “dropping” from $18.50 to $16.26 is not a victory — it is accounting comfort bought with a $424 realized loss.
4. Before you do a T, run FIFO through your head first
What if it rises, what if it falls, which batch is being sold — even one pass through your mind beats taking hits passively after the buy.
8. The RGTI Lesson from This Time
I meant to do a T for a quick spread, and the statement ended up absorbing a clean -$424.15. And this was not even the first time — on 7/9, selling 100 shares and buying them back crystallized the same script for -$288.05. Add the two together and this “T trading / position swapping” habit has left a -$712 bill on the statement.
The real lesson is not how much money was lost — it is this:
The same transaction can be three completely different numbers: in the broker’s statement, in your psychological ledger, and in true economic terms. Trade long enough and you will find that the most expensive thing is never the commission — it is not knowing which book you are reading.
As for those 200 old shares — the quantum sector is weakening overall, but the $20 CC in hand is still collecting premium. If the trend does not reverse, trimming should move up the priority list. Do not look at a $16.26 cost and think “it has to come back to this price before I leave” — your cost is your history; it does not affect where the price goes next.
Trading is a psychological game against yourself. The market will not rally because your cost is high, and it will not feel sorry for you because “you have already lost too much.” The only thing you can do is face honestly what every number means — and make the rational next move.