Balance, Equity and Margin on the Platform

The five figures

How they move

Open a position and margin rises by the required deposit while free margin falls by the same amount; balance does not change. As the trade moves, equity moves with it and free margin follows. Close the trade and the profit or loss becomes part of the balance, margin is released, and equity equals balance again. Swaps adjust the balance each night.

Where the broker acts

Each broker sets a margin call level, often 100 percent, at which it warns you that equity has fallen to the margin held, and a stop-out level, often 50 percent, at which it closes positions starting with the largest loser until margin level recovers. Both are in the account specification. Course 5 works through the arithmetic; for now, know where the numbers are on your platform and what they mean.

A daily check

Before trading: balance, so you know what one percent is. During: equity and margin level, so nothing is drifting towards a stop-out. After: balance again, and a note in the journal. Prop firm dashboards show the same figures against the firm's limits rather than the broker's.

Key takeaways

• Balance is closed money; equity includes open positions.
• Margin is the deposit held; free margin is what remains to open more.
• Margin level is equity over margin, and the broker acts at set levels.
• Check balance before, margin level during, balance after.