Basics
What is Balance vs equity?
By the verify.trading team · Last reviewed · How we write
Balance is your account's value from closed trades only. Equity is balance plus the floating profit or loss on open positions.
Key points
- Equity = balance + open profit/loss.
- Margin and many drawdown rules use equity.
- Check which one a rule uses.
Balance vs equity explained
Margin calls and many prop firm drawdown rules are measured on equity, so an open trade that is deeply negative counts against you even though you have not closed it. Firms differ on whether a rule uses balance or equity, so read the exact definition.
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