Equity (Equity).

This concept is directly related to your funds in the trader's trading terminal; it allows you to find out how much is currently available to you for opening a new position.

Equity is the remaining free funds in a trader's account. The value of this indicator constantly changes depending on the financial result of open positions: when profits increase, the value changes in the positive direction; when losses increase, the value changes in the negative direction.

In other words, we can say that equity forex is nothing more than the balance of the trading terminal minus the amount of the margin and (+;-) the financial result of the transactions. In the same case, if you close all open orders, the amount on the balance and the equity of the account will be the same.

If we turn to an example, we will see the following situation.

The account balance is 1000, the margin is 40, the loss is -70.

Equity = 1000-40-70 = 890.

It is with 890 dollars that we can open a new position on the forex currency market. And other indicators provide only reference information on your funds.

In practice, the equity value is shown in the "Free" or "Available Funds" tab in the trading terminal.

In addition, this term can be used and applied to other areas of activity.

• In the economics of an enterprise - the company's free funds remaining after profit distribution and debt repayment.

• In the banking sector - the profit received from various operations minus operating expenses.

• Applicable to capital investments – the difference between the market price of the acquired property and the amount remaining to be repaid.

As you can see, the concept of equity is quite widely used not only in forex but also when assessing the amount of available funds. Essentially, it is net capital without debt obligations, which can be used for both investments and other needs.