Equity vs Balance in MetaTrader
MetaTrader shows two headline numbers for every account: balance and equity. They are identical the moment everything is closed, and they can be hundreds or thousands apart the moment a position is open. The sections below explain floating P/L, why every margin calculation runs on equity rather than balance, and how a smooth balance curve can sit on top of an equity curve you would never knowingly accept.
Key takeaways
- Balance only changes when a trade closes or money is deposited or withdrawn — it ignores every open position.
- Equity = balance + floating P/L of open positions, recalculated on every tick.
- Margin, free margin and margin level are all computed from equity, so a healthy balance cannot prevent a stop out.
- Closing a trade moves balance to meet equity; it barely changes equity itself at that moment.
- A smooth balance curve can hide deep equity dips when losing positions are held open instead of closed.
- Reviewing equity-based drawdown alongside balance results shows the risk the account actually carried.
Two numbers that describe the same account
Open the terminal window in MT4 or MT5 and the account is summarized by two figures sitting next to each other. They answer different questions, and mixing them up is one of the most common reading errors in MetaTrader.
Balance
The realized history: deposits and withdrawals plus the final result of every closed trade, including its commission and swap. It does not move at all while positions are open.
Equity
The live value: what the account would be worth if every open position were closed at the current market price, right now. It updates on every tick.
With nothing open, the two are identical. The moment a position opens, they separate — and the size of that gap is exactly the floating P/L of what is open.
Floating P/L: the bridge between them
Floating (unrealized) P/Lis the profit or loss an open position would deliver if it were closed at the current price. MetaTrader recalculates it on every incoming tick, and it already includes any swap accrued on the position so far. It is called “floating” because it is not booked anywhere yet — it exists only as long as the position does.
Equity = balance + floating P/L of open positions
- balance
- realized results of closed trades, plus deposits and withdrawals
- floating P/L
- unrealized profit or loss of everything open, at current prices, including accrued swap
The sign matters. Open positions in profit lift equity above balance; positions in loss drag it below. A freshly opened trade starts slightly negative because of the spread, so equity dips a few currency units under balance the instant the order fills.
One open loser: where the gap comes from
A short position moving against the account
- Balance: $10,000, no positions open — equity also $10,000.
- Open: sell 0.50 lots EUR/USD at 1.0850.
- Price rises 80 pips against the position, to 1.0930.
- Pip value at 0.50 lots = $5 → floating P/L = −80 × $5 = −$400.
- Equity = 10,000 + (−400) = $9,600 — while balance still reads $10,000.
- Close the position: the −$400 becomes realized. Balance drops to $9,600 and equals equity again.
Balance
$10,000
Closed trades only — unchanged while the position stays open
Equity
$9,600
−$400 floating loss on one open EUR/USD position pulls equity below balance
The closing step is worth pausing on. Closing the trade did not “cost” $400 — that loss already existed in equity while the position was open. Closing only converts floating into realized: balance moves to where equity already was, and equity itself barely changes at that moment. The damage happened during the trade, not at the close.
Margin runs on equity, not balance
Whether the account can open another position — and whether the broker starts force-closing existing ones — is decided entirely by equity. Balance plays no role in any of the three margin figures MetaTrader displays:
Margin
The collateral reserved for the positions currently open, determined by position size and leverage. Often shown as “used margin”.
Free margin
Equity minus used margin — the buffer available to open new positions or to absorb further floating losses.
Margin level
Equity ÷ margin × 100. The percentage the broker's margin call and stop-out thresholds are checked against.
How margin and leverage interact to set those thresholds is covered in the margin and leverage guide.
Balance drawdown vs equity drawdown
Drawdown can be measured on either curve, and the choice changes the story. A balance-based drawdown only sees closed results; an equity drawdown also sees every dip that happened while positions were open. Equity drawdown is therefore always at least as deep — and for some styles of trading, dramatically deeper.
Consider a scenario: an account closes sixty small winners over a quarter, so the balance curve climbs in a near-straight line with a worst balance dip of 4%. But the same account held losing positions open for weeks at a time, waiting for price to come back. At its worst moment, equity stood 23% below its peak — risk the balance curve never recorded.
This is the classic signature of holding losers: every closed trade is a small win, so the balance curve looks smooth, while the floating loss quietly grows underneath it. The general mechanics of peak-to-trough declines are covered in the drawdown guide, and the free Drawdown Calculator computes both flavours from your own numbers.
What each number is good for
Neither figure is “the real one” — they answer different questions, and a fair read of an account needs both:
| Property | Balance | Equity |
|---|---|---|
| Updates | Only when a trade closes or money moves in or out | Every tick, while anything is open |
| Includes floating P/L | No | Yes — all open positions, including accrued swap |
| Drives margin level & stop out | No | Yes — margin level = equity ÷ margin × 100 |
| Tells you | Realized results to date | What the account is worth right now |
| Blind spot | Risk being carried in open positions | Noisy — moves with every price tick |
What a dashboard should show
Because each number has a blind spot, an account view that shows only one of them is incomplete. A useful monitoring setup separates the live picture from the historical one:
- Live: equity, floating P/L and margin level — the risk the account is carrying at this moment.
- History: both curves side by side — balance for realized outcomes, equity for the path the account actually travelled between them.
- Drawdown: computed on equity, so weeks spent underwater on held positions cannot disappear from the record.
- The gap itself:a balance–equity gap that keeps widening is an early, objective sign that losers are being held rather than closed.
This is hard to maintain by hand, because floating P/L leaves no trace once a position closes — the terminal’s history shows only the realized result. An analytics dashboard built on your own MetaTrader account data can track equity alongside balance continuously, so the difference between a smooth result and a smooth ride stays visible.
Frequently asked
Why is my equity lower than my balance?
Because at least one open position is in floating loss. Equity is balance plus the unrealized profit or loss of everything open, so negative floating P/L pulls equity below balance. The gap closes when the positions are closed — in either direction.
When are balance and equity exactly equal?
Whenever no positions are open. With nothing open there is no floating P/L, so equity equals balance. The instant a position opens, the spread alone puts it slightly underwater and the two numbers separate.
Which number does the broker use for margin call and stop out?
Equity. Margin level is equity divided by used margin, times 100. When floating losses push that percentage below the broker's stop-out threshold, positions are force-closed — regardless of how large the balance is.
Why did my balance jump when I closed a trade but my equity barely moved?
Closing converts floating P/L into a realized result. The equity already reflected that profit or loss while the position was open, so at the moment of closing, balance moves to where equity already was. The gain or loss happened during the trade, not at the close.
Related guides
What Is Drawdown in Trading?
Peak-to-trough decline, the MetaTrader drawdown metrics, and why a 50% loss needs a 100% gain.
Margin and Leverage in Forex Explained
Required margin, free margin, margin level — and why leverage changes the collateral locked, not the market risk.
Why a Trading Journal Matters
Why consistent trade records beat memory: patterns, cost drag, rule adherence and a review loop that actually happens.
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Sources & further reading
- MetaTrader 5 Help — Margin calculation for forex instruments — official reference for how the platform computes margin requirements on open positions.
- MQL5 Documentation — Account properties — the platform's own definitions of balance, equity, margin, free margin and margin level.
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This article is for educational purposes only. It does not provide trading signals, investment advice, financial recommendations, broker recommendations or trade execution.