What is its definition?
Equity is the current value of your account, taking into account both the available balance and any unrealized gains or losses.
🔎 It's calculated as follows:
Equity = Balance ± Live Profit/Loss (Live P/L)
What does this mean?
Balance = The amount of money you have in your account, not including open trades
Live P/L (Profit/Loss) = The current profit or loss from your currently open trades
Equity = What your account would actually be "worth" if you closed everything right now
Example
Concept | Value |
Balance | £500 |
Live Profit/Loss | + £200 |
+ £200 Equity | £700 |
✅ If your open trades are profitable, your equity will be greater than your balance.
❌ If they are losing, your equity will be lower.
Why is it important to know your equity?
Equity is one of the most important metrics in trading because:
📌 It reflects the real, current value of your account
📌 It is used to calculate the margin available for new trades
📌 It affects decisions about risk management and leverage
📌 It is used to set up proportional copying strategies (such as Proportional by Equity)