The total value of a trader’s futures account, including the cash balance plus unrealized profits or losses from open positions. It reflects the current worth of the account at any given moment.
Why It Matters
- 1Account equity is used to calculate margin requirements, drawdowns, and eligibility for payouts in prop firm accounts.
- 2Monitoring equity helps traders manage risk and avoid margin calls or rule violations.
Example
- 1A trader has $50,000 in cash and holds open positions with $2,000 unrealized profit.
- 2The account equity is $52,000. If the open positions turn into a $1,000 unrealized loss, the equity drops to $49,000.
Common Mistakes
- ✖Confusing account equity with balance.
- ✖Ignoring unrealized profits or losses when planning trades
- ✖Failing to track equity changes, risking margin violations