What's the difference between Equity & Account Balance in forex?
Before you open a trade, your Account Balance, Equity & Free Margin will be equal as you can see in this screenshot.
However, as soon as you open a trade although your account balance remains the same, the Equity begins to change because the spread is deducted from the equity, and any profit or loss is also deducted from the equity on a live basis.
So Account Balance can be defined as the money in your account before you opened a trade, and Equity can be defined as the money in your account while your trade is still active/open.
By the time you close the trade you will notice that Equity & Account Balance will become the same again.
Before you open a trade, your Account Balance, Equity & Free Margin will be equal as you can see in this screenshot.
However, as soon as you open a trade although your account balance remains the same, the Equity begins to change because the spread is deducted from the equity, and any profit or loss is also deducted from the equity on a live basis.
So Account Balance can be defined as the money in your account before you opened a trade, and Equity can be defined as the money in your account while your trade is still active/open.
By the time you close the trade you will notice that Equity & Account Balance will become the same again.
Take a look at the screenshot from a demo account trade, while Account Balance is $49,993.70 the Equity has fallen to $49,989.70 because the trade is in a loss of $4.
The margin level is also calculated by (Equity/Margin)x 100
So Margin Level is ($49,989.70/$270.13)x100 =18,506.14%
