Account Equity
Quick Answer
Account equity is the current value of a trading account after taking account of relevant balance components and the unrealised profit or loss on open positions. Unlike account balance, equity can change while trades remain open because market-price movements alter their floating profit or loss.
How does account equity work?
Account equity provides a more current view of an account than balance alone when positions are open.
On MetaTrader 5, balance excludes the results of currently open positions, while equity includes their current effect. MetaTrader 5 documents its equity calculation as:
Formula
Equity = Balance + Credit − Commission ± Floating profit/loss − Blocked
Where
Input A — what it means
Input B — what it means
Example
Replace with a short worked numeric example.
The exact account components and treatment of floating results may depend on the trading conditions configured by the broker.
If an open position moves into profit, equity may rise even though the account balance remains unchanged. If the position moves into a loss, equity may fall. When the position is eventually closed, its realised result is reflected in the account balance, subject to the applicable account rules and charges.
MetaTrader 5 trading reports therefore show balance and equity separately: balance excludes the results of currently open positions, while equity includes them.
Key features of account equity
Several characteristics help distinguish account equity from related trading-account figures:
Reflects open positions: Equity generally incorporates floating profit or loss from positions that have not yet been closed.
Changes with market prices: Because unrealised trading results can change as prices move, equity may fluctuate even when there are no deposits, withdrawals or closed trades.
Different from balance: Balance excludes the current results of open positions, while equity incorporates them under the applicable account calculation.
Connected to free margin: MetaTrader 5 calculates free margin as equity minus margin, subject to broker-defined trading conditions.
Used in margin level calculations: On MetaTrader 5, margin level is calculated as equity divided by margin, multiplied by 100.
Simple account equity example
Suppose a trader has an account balance of $10,000 and no other relevant credit, blocked amount or commission adjustment.
If the trader has open positions showing an unrealised profit of $600:
$10,000 + $600 = $10,600 account equity
If those open positions instead show an unrealised loss of $900:
$10,000 − $900 = $9,100 account equity
In both cases, the balance can remain at $10,000 while the positions are still open. The equity changes because it reflects their floating result.
This example is illustrative only. It does not represent actual FxGrow account conditions, expected performance or a universal equity-calculation formula.
Potential benefits and uses
Monitoring account equity may help a trader understand the current financial state of an account while positions remain open.
It can be used to:
compare the current account value with the recorded balance;
observe the effect of unrealised profits and losses;
understand how current positions affect free margin;
monitor margin level where equity forms part of the calculation;
identify periods when open losses are materially reducing available account resources.
Equity is therefore an important account metric, but it should be considered together with balance, margin, free margin and open-position information rather than in isolation.
Risks, limitations and common misconceptions
A common misunderstanding is that account equity and account balance are the same figure. They may be equal when there is no relevant floating profit or loss and no other adjustment causing a difference, but they can diverge when positions are open.
Another misconception is that an increase in equity from an open profitable position represents a realised gain. It does not necessarily do so. Until a trade is closed and its result is posted, the value can change as market prices move.
Falling equity can also reduce free margin and affect margin level. MetaTrader 5 defines free margin as equity minus margin and margin level as equity divided by margin, subject to the applicable trading conditions.
Equity should therefore not be viewed as a guarantee of how much money a trader will ultimately retain, withdraw or realise from open positions.