While trading, it’s not uncommon for traders who are starting out to get confused between their balance and their equity. While they can sometimes reflect the same amount, Balance and Equity refer to two different amounts. Equity is the amount of money a trader has in their trading account (i.e. their Balance) plus or minus any profit or loss from open positions.
If, however, the trader doesn’t have any open positions, equity is equal to their balance.
Equity Calculation:
Equity = Balance - Floating (P/L)
Balance Calculation:
Balance = Equity + Floating (P/L)
