Balance, Equity and Unrealized P/L

TRADING ACCOUNT BALANCE

Before you can start trading with the Forex market, you'll be going to need to open a trading account with the Forex Broker of your choice.

Then you will need to fund your account with your risk capital. (the money you will use in trading)

Take note that you will only deposit a capital that you can afford to lose because trading involves high risk and it can lead to big losses when the market moves against you!

Credit on the other hand refers to bonuses that are offered by a Broker, It will be added to your trading account as a credit to increase your leverage but the credit bonus can not be withdrawn. You can only withdraw the profit gained from the credit bonus based on Broker's terms and client agreement.

For example, Broker A offers a 100% credit bonus if you deposit 100USD. 

After you deposit, you'll have a trading account balance of 100USD + 100USD credit a total of 200USD in Equity.

Equity is the real time value of your trading account. If you have no open position, your equity will be equal to your balance.

If you have an open position,

Then an Unrealized Profit or Loss (Paper Loss or Gain) will be in place, this is also known as Floating Profit or Loss since the value is constantly changing relative to the price movement. If the market goes with your current position,  the value will be floating positive (unrealized profit) but if the market goes against the current position, then the value of your current position will be in negative (unrealized loss). 

In formula,

These Unrealized P/L will turn to a Realized Profit or Loss if you closed your current position. If in profit, it will be credited to your account balance, and if the floating position you closed is in loss, it will be deducted to your account balance.

Aside from knowing about your account balance and equities, you should also know how to be a healthy trader based on your equities and open positions. Learn about your Margin Level.