Equity  

Equity is the real-time value of your account.

Equity is the real-time value of your trading account; therefore, the equity in your account fluctuates according to unrealised profits and losses. If you don’t have any open positions, then your equity and balance are equal. If your account is in drawdown, then equity will be lower than balance, whereas if your positions are profitable, then equity is higher than your account balance.

Equity is the basis of calculating free margin. If your equity grows because of unrealised profits, you can use equity from unrealised gains to increase your exposure with new or larger positions. Keep in mind that the greater your exposure, the more risk you face.

Calculation: account balance – unrealised net loss + unrealised net profit = equity