What is Equity in Forex?

forex trading platforms

A top notch forex trader will always have at least a few open positions since they would be testing the waters to see if their investments would be able to pan out as the months go by. Some traders would hold positions for as little as a few hours and at times even minutes, whereas others would try to make their positions last for a much longer period of time since there is a pretty good chance that longer investments will give even higher returns although they also leave a fair bit of room for significant losses if you are not exceedingly careful.

One term that people fail to consider the significance of during forexfear trading is equity, and the truth of the situation is that you need to learn about this term before you make even the smallest trades. This is because of the fact that not knowing what equity is during trading is a lot like not knowing what a steering wheel is while you are driving any sort of vehicle! The fact of the matter is that equity basically refers to the total value of all of your investments after adding profit and deducting losses from the various open positions that you are currently holding.

Another way to look at your equity is that it is your net worth, or at least the net worth that is tied up in your forex dealings. You should take your equity very seriously indeed because it should always trend upwards which means that you should be making a profit and increasing your overall equity every once in a while otherwise your career would become a train wreck all in all.