What is Equity (Account)?

Your account's live value: balance plus the floating profit or loss of open trades — the number that actually matters.

Equity is the real-time value of a trading account: the closed balance plus or minus the floating profit and loss of every open position. If your balance is $5,000 and open trades are down $200, your equity is $4,800 — that is what the account is actually worth right now. Balance only updates when trades close, which makes it a lagging number; equity is the live one, and it is what brokers use to calculate margin level and trigger stop-outs.

Watching equity honestly is a habit that separates professionals from hopeful amateurs. A trader holding a large floating loss while pointing at an untouched balance is telling themselves a comfortable story — the loss is real, it simply has not been admitted yet. Equity is also the correct base for risk calculations: risking 1% should mean 1% of current equity, not of a balance inflated by open losers, so that position sizes shrink automatically during drawdowns.