A closed position refers to a completed trade where the initial position has been offset by an opposite transaction, realizing any profit or loss. For example, if you bought 100 shares of a stock (opened a long position), selling those 100 shares would close the position. The difference between the opening and closing prices determines the trade’s profit or loss.

Closing positions is fundamental to active trading and portfolio management, allowing traders to realize gains, limit losses, and free up capital for new opportunities. Some positions may be closed partially (reducing position size) or completely (eliminating all exposure). The timing of position closures significantly impacts trading performance and tax implications.

Real-world example: A trader bought EUR/USD at 1.1000 (opened long position) and later sold at 1.1050 (closed position), realising a 50-pip profit on the completed round-trip transaction.