Balance plus or minus your current floating P&L — what you'd have if you closed every trade right now.
Equity is your account balance combined with the unrealized (open) P&L of every active trade. Unlike balance, equity moves in real time. Every pip your trades move in your favor, equity ticks up. Every pip against, it drops.
Equity is the number that matters for margin calls. When equity falls below a certain threshold (usually 50% or 20% of used margin depending on the broker), the broker starts auto-closing positions. That's why traders who over-leverage can get wiped out overnight even though their balance "looked healthy."
If you have zero open trades, equity = balance. The moment you open a trade, they diverge.
The 2015 CHF shock destroyed thousands of retail accounts — equity went from positive to negative in seconds as stops gapped through. Many brokers had to forgive the negative balances just to survive.
Frequently asked about equity
What is an equity in trading?+
Balance plus or minus your current floating P&L — what you'd have if you closed every trade right now.
When will I see equity used in real trading?+
Every time you have an open trade. Watch it tick up and down in real time — that's the real P&L.
What is the most common mistake traders make with equity?+
Using balance instead of equity when sizing new trades. Your REAL risk capacity is equity, not balance. If equity is down, you need to size smaller.
What do experienced traders know about equity that beginners don't?+
Set a daily equity stop. If equity drops 3% from the day's start, stop trading. This protects you from revenge trading after a loss.
Read the lesson here. Mark the chart on TradingView. Compare brokers with the checklist.
TradingView is the chart workspace most learners already recognize: watchlists, alerts, drawings, and clean multi-market charts. Broker research stays methodology-first: jurisdiction, costs, platform, withdrawals, and risk before any account decision.