Equity

The live value of a trading account: the balance, plus the unrealised result on all open positions, less any charge already applied to the account. Balance and equity are equal only when no position is open. While positions are open the balance sits still, because it moves once, at the close of each position, and equity revalues on every tick.

Equity is the input to the two figures that govern a position's survival. Free margin is equity less the margin held against open positions, and margin level is equity expressed as a percentage of that held margin. A firm states a margin close-out level as a percentage, and it is measured against equity rather than balance, which is why a position can be closed out while the balance still shows the deposit intact. Because margin is a requirement stated as a percentage of the full contract value, and profit and loss are calculated on that full value, an adverse move reduces equity by an amount that has no relation to the sum posted, and losses are not limited to the amount deposited.

One word, two unrelated meanings, is the usual confusion. In a company context equity means an ownership stake, which is why shares are collectively called equities and why a company's balance sheet reports shareholders' equity. Account equity is the sense used on a trading platform, and it has nothing to do with owning anything.