"Equity" is another important word in the forex market. It has a similar meaning to "balance," but it is calculated differently. In this article, we'll explain what equity means and how to calculate it so you can understand it better.
What Is Forex Market Equity?
Equity in the forex market is the total amount of money in a trading account, and it shows up in real-time. Therefore, when traders place an order and make a profit or loss, the value of equity changes right away. Traders don't have to wait until the order is closed. However, when you close all orders, the equity immediately equals the balance.
Equity Calculation
“ Equity = Balance + Profit - Loss ”
For example, if the account has a balance of $1000, and you have placed an order. The order you placed has a $200 profit, so your account equity will increase to $1,200 immediately, even if you haven't closed the order yet.
Benefits of Equity
The equity shows how much money you have in your trading account in real-time. Therefore, equity helps traders plan their trading more easily and better.
Conclusion
Equity is the total amount of money in a trading account that shows up in real-time. Therefore, equity will show a more precise amount than balance, making it easier to plan your trades.
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Updated
1 year ago
(May 13, 2023 11:29)