what is equity in forex

In forex trading, equity refers to the total value of a traders account. It represents the current value of the trading account and fluctuates with every market movement. Equity is calculated by adding the account balance and any floating profits or losses from open positions. When there are no active trade positions, the equity is known as free margin and is the same as the account balance. It is important to understand equity as it reflects the real-time amount of funds in the trading account, considering both open and closed positions. Equity is a crucial concept in forex trading, and it helps traders assess their financial standing and make informed decisions about their trades.