CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

What is your Balance? Forex Basics

Forex Educational Video Series

What is your Balance in Forex trading?

When trading, the balance refers to the amount of money a trader has in their trading account. However, it’s important to remember that this amount does not include any profits or losses a trader might have from any open positions. If a trader has an open position, his or her balance might change depending on the losses or profits he or she has made once the trade (or part of the trade) is closed. A trader’s balance is located in different sections on the trading platform, depending on whether the trader is using the MT4 or the MT5 platform. On the MT4 Client Terminal, the balance is displayed in the Terminal window under the Trade tab. On the MT5, the Balance can be seen in the Toolbox under the Trade tab.

What is the difference between forex balance and forex equity?

The forex balance is all the money in your forex account.

Equity is the balance plus/minus any profit/losses from open positions. If you don’t have any positions open, your equity is equal to your balance.

How will I know how much of my balance is available to trade with?

A good way is to calculate your Free Margin. This is whatever equity you have that isn’t tied up in margin for your open positions. It’ll give you a clear idea of whether extra funds are needed.

Here’s an example:
You have a balance of $10,000. You buy 2 lots of EUR/USD at 1.20000, so you need $240,000 (200,000 X 1.2000) and the margin is 240,000/50 = $4800.

The price of EUR/USD drops to 1.19050 and you take a loss of 0.00950 pips (1.20000 – 1.19050), which amounts to $2280. So the equity ($10,000 – $2280) minus Margin ($4800) = $2920 of free margin.

What’s the minimum balance for forex trading?

When you trade forex with leverage you’ll control a much greater amount than your account balance, so you can start with a relatively low balance. With an FXTM you can open an account with as little as $10.

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

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