Definition
What is Equity?
Equity is the real-time value of a trading account: the balance plus the floating profit or loss of all open positions.
Balance only changes when a trade is closed. Equity changes with every tick while you have positions open, because it includes their unrealised profit or loss.
If you have no open trades, equity and balance are the same. With open trades, equity is the number that tells you what the account would be worth if you closed everything right now.
Margin calculations and most risk limits use equity, which is why a large floating loss can trigger a limit even though the trade is not closed.
Example
Balance $100,000 with one open trade at -$1,200: equity is $98,800. If the trade later closes at -$500, balance and equity both become $99,500.
At a prop firm
Axora Funded checks the daily and maximum loss limits on equity in real time, so floating losses count.
Frequently asked questions
Why is my equity lower than my balance?
Because your open positions are currently in a loss. When you close them, the balance absorbs that result.
Do prop firms use equity or balance?
Loss limits are usually checked on equity, including at Axora Funded.