Home/Glossary/Equity vs Balance
Home/Glossary/Equity vs Balance
Market & instruments

Equity vs Balance

By Jarosław Wasiński • Published: • Updated:
Balance records booked account transactions, including deposits, withdrawals and realised results or charges. Equity also reflects the current valuation of open positions and other adjustments defined by the platform. The common approximation is equity = balance + floating P&L; credits and separately accounted fees can change the exact formula.
Example. Ignoring other adjustments, a balance of $1,000 with an open loss of $100 gives equity of $900. If used margin is $300, free margin is $600 and margin level is 300%.

Common mistake: treating balance as available money

Balance alone excludes unrealised trading losses. Equity and used margin are needed to assess free margin. Credits, charges and the treatment of open profit can vary; use the definitions in your account agreement.

Apply it

Check equity, free margin and margin level together before evaluating whether your account can support a position.

Diagram and worked example

Educational infographic: Equity vs Balance
Educational diagram; model data and assumptions are stated in the graphic.
Open the full-size graphic

Realising a loss

In the no-cost example, closing the USD 100 floating loss moves balance from USD 1,000 to USD 900 while equity remains USD 900. It changes the classification of the loss rather than restoring capital. Releases of margin and new charges are separate effects.

FAQ

Does closing an open loss restore equity?

Not by itself. The floating loss becomes realised; ignoring costs and price changes, balance falls to the prior equity while equity stays the same.

Can a profitable closed-trade balance hide current losses?

Yes. Open losses can lower equity without yet changing the closed-trade balance.

← Back to the full glossary

Put this term into practice

Balance records booked account movements. Equity includes unrealised profit or loss: a $1,000 balance with an open $100 loss means $900 equity, ignoring other adjustments. The balance alone does not show your available capital.

Commonly confused terms →

Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
  • Advocate for market transparency, promoting education grounded in hard data and institutional reports (BIS, ESMA, CFTC).

All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.