Equity.

This concept is directly related to your funds in the trader’s trading terminal; it is thanks to it that you can find out how much is currently available to you to open a new position.

Equity is the balance of available funds in the trader’s account; the value of this indicator constantly changes depending on the financial result of open positions, with an increase in profits in a positive direction, and with losses in a negative direction.

In other words, we can say that Forex equity is nothing more than the balance of the trading terminal minus the amount of collateral and (+;-) the financial result of transactions.

In the same case, if you close all open orders, the amount on the balance and equity of the account will be the same. If we take an example, we will see the following situation.

Account balance 1000, deposit 40, loss -70.

Equity = 1000-40-70 = 890.

It is for $890 that we can open a new position on the Forex currency market.

And other indicators provide only background information on your funds. In practice, in the trading terminal, the equity value is shown by the “Free” or “Free Funds” tab.

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, the remaining field for distribution of profits and repayment of debt obligations.

• In banking, the profit earned from various transactions minus operating expenses.

• Applicable to capital investments - the difference between the market price of the property received and the amount that remains 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. In fact, this is pure capital without debt obligations, which can be used both for investment and for other needs.