Trading glossary
Account balance
Trading involves risk. You could lose more than your deposit.
The cash figure on a trading account after every completed transaction, moved only by deposits, withdrawals, closed positions and posted charges, and unaffected by positions still open.
Balance is a record of settled cash rather than a valuation of an account. It begins at the amount deposited and changes only when something completes: a deposit clears, a withdrawal leaves, a position closes and its result becomes realised, or a charge such as commission or an overnight financing adjustment is posted.
Equity is the balance adjusted for whatever the open positions are currently worth, so the two figures agree only when nothing is open. Margin is measured against equity, not against balance, which is why an account can sit close to a forced close out while its balance still shows the figure it showed the previous day. Free margin and margin level both derive from equity for the same reason.
The confusion that catches most readers is treating balance as money available. It is not. Part of it is committed as used margin for as long as a position is open, and an unrealised loss reduces equity long before it reaches balance. Providers also differ on where financing adjustments land: some post them to balance as they accrue, others hold them against the position and realise them at the close, so two statements can describe the same account in different figures.
How it is calculated
Balance equals deposits less withdrawals, plus realised profit and loss, less commission and financing already posted. Equity equals balance plus the unrealised profit and loss on positions still open.
Balance and equity on the same account
- Deposits less withdrawals
- 5,000.00
- Realised results on closed positions
- 320.00 credit
- Commission and financing already posted
- 45.00 debit
- Balance
- 5,275.00
- Unrealised result on one position still open
- 180.00 debit
- Equity
- 5,095.00
Illustrative amounts in an unnamed account currency. The unrealised figure moves on every tick while the position stays open, and reaches balance only when the position closes.
Where you see it
MetaTrader 5 prints Balance, Equity, Free Margin and Margin Level together on the Trade tab of its Toolbox.
In the curriculum
Taught in 4 lessons.
Part of an ordered curriculum of 139 lessons across 10 modules, free and with nothing behind a sign-up.
Get started
Open your account in four steps.
A clear path from sign-up to your first trade, in four steps.
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01/ 04step 1 of 4
Register
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02/ 04step 2 of 4
Verify
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03/ 04step 3 of 4
Fund
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04/ 04step 4 of 4
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MetaTrader 5
