Account Equity
Trading MechanicsThe real-time value of your account including open positions. Equity = Account Balance + Floating P/L. Equity determines your margin level and available margin.
What Is Account Equity?
Account equity is the current real value of your trading account. It equals your Account Balance plus any Floating P/L from open positions. If your balance is $10,000 and your open trades show a combined floating profit of $500, your equity is $10,500. If those trades are losing $500 instead, your equity is $9,500.
Why Equity Matters More Than Balance
Equity is the number that actually matters for risk management. Your Margin Level is calculated from equity, not balance. Your Free Margin is derived from equity. Margin calls and stop-outs trigger based on equity. A trader with a $10,000 balance but $9,000 in floating losses has only $1,000 in real equity and is at much greater risk than the balance suggests.
Equity During Trading
With no open positions, equity equals balance. The moment you open a trade, equity starts fluctuating with every price tick. Equity increases when your positions are in profit and decreases when they are in loss. Watching your equity (not just your balance) gives you an accurate picture of your account health at any moment.
Related Terms
Account Balance
The total amount of money in your trading account from deposits, withdrawals, and realized (closed) trades. Does not include floating profit or loss.
Floating P/L
The unrealized profit or loss on open positions based on current market prices. Floating P/L changes with every price tick until the position is closed.
Free Margin
The amount of money in your account that is not tied up as collateral for open positions. Free margin equals equity minus used margin.
Margin Level
The ratio of account equity to used margin, expressed as a percentage. Margin level = (Equity / Used Margin) x 100%. Below 100% typically triggers a margin call.