A capital loss occurs when the selling price of an asset is lower than the purchase price. The capital loss is considered realized when the asset is sold, and until this occurs the capital loss is considered unrealized.
Example:
100 shares of Google are purchased $415 per share for a total price of $41,500. The value of Google share falls to $400 per share by mid day. If the investor is contemplating a sale he/she would calculate that currently he/she has an unrealized capital loss of $1,500. The investor decides to sale Google and now has a realized capital loss of $1,500.
