Forex glossary
Equity
Documentation context: In MT5 the exact value may include credit, commissions and blocked funds; account rules determine how these fields are treated.
The account value including balance and unrealized profit or loss on open positions. The provider's exact formula may also include credit, commissions and blocked funds.
Illustrative example
How does it work in practice?
In a hypothetical simplified account, balance is 1,000 USD and open positions have unrealized P/L of −80 USD. With all other components zero, equity is 920 USD while balance remains 1,000 USD.
One account, four different figures
Balance, equity and available collateral
Model with no credit, fees or blocked amounts: balance 10,000 USD, open P/L −800 USD and used margin 2,000 USD.
On a narrow screen, the table can be scrolled horizontally.
| Term | What it describes | Shared example |
|---|---|---|
| Balance | Booked funds; open P/L does not change balance in this model. | Balance remains 10,000 USD. |
| Equity | Current account value; margin is not deducted from it. | 10,000 − 800 = 9,200 USD. |
| Margin (deposit margin) | Required collateral, rather than a fee already paid. | The positions require 2,000 USD of collateral. |
| Free margin (available margin) | Equity minus margin; not the same as withdrawable cash. | 9,200 − 2,000 = 7,200 USD. |
| Margin Level | Equity relative to margin, expressed as a percentage. | 9,200 / 2,000 × 100% = 460%. |
Takeaway: Identify whether a figure is a booked amount, account valuation, collateral requirement or ratio. Do not deduct margin from equity.
Change an assumption, see the result
What changes if…?
Move open P/L from a loss to a gain. Follow equity, then observe the same change in free margin and margin level.
Model: equity = balance + open P/L; free margin = equity − margin. No credit, fees or other blocks. The stop-out threshold is hypothetical; the actual formula and action depend on the provider’s terms.
Check your understanding
Calculate equity without omitting open P/L or deducting margin.
Show the answer and explanation
5,250 USD
Equity is 5,000 + 250 = 5,250 USD. Deducting margin afterwards gives free margin.
Read the account and its margin thresholds
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Related terms
Sources and documentation
- MetaTrader 5: executing trades
Execution modes, requotes, position handling and local trailing on this platform.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.