#equity #margin #forex #daytrading
On today’s video, I cover very important concepts in forex trading like, account balance, equity, margin and how you can implement all of this in your trading. Subscribe, Like 👍, enjoy the video and let me know on the comment section if you have any questions 😊
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⏰ Time Stamp ⏰
00:00 Intro
01:05 : Table of content
02:42 : What is Forex Account Balance
03:42 : What is Floating Profits in forex
05:56 : What is Margin
09:14 : What is Free Margin
10:52 : What is Margin Level
12:22 : What is Stop Out Level
14:47 : What is Margin Call
16:58 : What is Equity
20:42 : Forex Accounting MT5 demonstration
25:50 Outro
⏰ Time Stamp ⏰
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Margin
DEFINITION:
Margin is the amount of money you are required to deposit with your trading platform in order to order and maintain positions in the forex market. Margin is used as collateral to ensure you can cover any losses you might incur on your positions.
Leverage
DEFINITION:
Leverage is the ability to trade a larger amount with a much smaller amount in your account.
Unrealized P/L
DEFINITION:
Unrealized P/L is the current profit or loss (P/L) held in your open positions.
ALSO CALLED:
Floating P/L
Balance
DEFINITION:
Balance is the total amount of cash you have in your trading account. If you have an open position, even if it has a floating profit (or loss), your Balance is still the same as before you opened the position. But once you close the position, the profit (or loss) will be added (or deducted) from the Balance and this will be your new Balance.
ALSO CALLED:
Account Balance
Cash
Margin Requirement (Per Position)
DEFINITION:
Margin Requirement is the amount of margin required to open a position. It is expressed as a percentage (%) of the “full position” size or “Notional Value” of the position you wish to open.
Required Margin (Per Position)
DEFINITION:
Required Margin is the money that is set aside and “locked up” when you open a trade.
For example, if you open a $10,000 (mini lot) position, with a Required Margin of 2% (or 50:1 leverage), $200 will be “locked up” during the duration of the trade.
This $200 can’t be used to open other positions as long as the trade is open. Once you close the trade, the $200 margin will be “released”.
ALSO CALLED:
Entry Margin
Initial Margin
Initial Entry Margin
Maintenance Margin Required (MMR)
Used Margin
DEFINITION:
Used Margin is the minimum amount of Equity that must be maintained in a margin account. This is the total amount of margin currently in use to maintain open positions.
ALSO CALLED:
Margin Used
Maintenance Margin Required (MMR)
“Total Margin”
HOW TO CALCULATE:
Used Margin is simply the Required Margin for ALL open positions.
Used Margin = Total Required Margin for ALL Open Positions
Equity
DEFINITION:
Equity is your account balance plus the floating profit (or loss) of all your open positions. Represents the “real-time” value of your account.
ALSO CALLED:
Account Equity
Net Asset Value
Net Equity
Free Margin
DEFINITION:
Free Margin is the money that is NOT “locked up” due to an open position and can be used to open new positions. When this value is at zero or less the Margin Warning is triggered and additional positions cannot be opened.
ALSO CALLED:
Free Margin
Available Margin
Usable Margin
Usable Maintenance Margin
“Available to Trade”
HOW TO CALCULATE:
Free Margin = Equity – Used Margin
Margin Level
DEFINITION:
Margin Level is the ratio between Equity and Used Margin. It is expressed as a percentage. For example, if your Equity is $5,000 and the Used Margin is $1,000, the Margin Level is 500%.
ALSO CALLED:
Margin Indicator
HOW TO CALCULATE:
Margin Level = (Equity / Used Margin) x 100%
Margin Call Level
DEFINITION:
The Margin Call Level is the specific level (%) where if your margin level is equal or below it, you won’t be able to open any new positions. Your trading platform determines the Margin Call Level.
NOT FINANCIAL ADVICE DISCLAIMER
The information contained here and the resources available for download through this website is not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information contained on this Website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.