What is account balance in forex?

You deposit $1,000 into a new trading account. Before you place a single trade, your balance is $1,000. It changes only when money is booked into or out of the account.

Your account balance is the money in your account from deposits, withdrawals and closed trades. Open positions are not counted until you close them.

What does your account balance include?

Think of the balance as a ledger of finished business. Every entry is something that has already happened and can no longer change.

These entries move it:

• Deposits add to it.
• Withdrawals take from it.
• A closed trade adds its profit or takes its loss.
• Trading costs such as commission and swap are taken from it once they are booked.

An open trade does none of this. Its result is still moving, so the platform shows it separately as floating profit or loss, which the next lesson on floating P/L covers.

The lesson on margin trading showed that a broker reserves part of your money as margin while a trade is open. That reserve is not taken out of the balance.

How the balance changes, step by step

The prices below are round and illustrative. Each one is the price your order filled at, so the spread is already inside it. A pip on 0.10 lot of EUR/USD or GBP/USD is worth $1.

1. You deposit $1,000. Balance: $1,000.00.
2. You buy 0.10 lot of EUR/USD at 1.10000 and close at 1.10250. The move is 0.00250, or 25 pips, so 25 × $1 = +$25.00. Balance: $1,025.00.
3. You sell 0.10 lot of GBP/USD at 1.30000 and buy it back at 1.30180. The sum is 1.30000 − 1.30180 = −0.00180, or −18 pips, so −$18.00. Balance: $1,007.00.
4. You withdraw $200. Balance: $807.00.

You can check the total in one line: $1,000 deposited, minus $200 withdrawn, plus closed results of $25 − $18 = $7, gives $807.

The withdrawal makes the biggest drop on the chart below, yet it says nothing about your trading. The $200 has moved to your bank account and is still yours.

Why the balance stays still while a trade is open

Go back to step 3. While the GBP/USD sell was open, the ask first rose to 1.30400 before it fell back.

At 1.30400 the trade was 40 pips against you, a floating loss of 40 × $1 = $40.00. Your balance still read $1,025.00, because nothing had closed yet.

What did change was your equity, the balance plus the floating result of all open trades. At that moment equity was $1,025.00 − $40.00 = $985.00.

When you closed at 1.30180, the floating loss of $18.00 became a realised loss. The balance dropped to $1,007.00, and with no trade open, equity matched it again.

The balance tells you where you stood after your last closed trade. Equity tells you where you stand right now.

Where commission, swap and bonuses fit

Costs reach the balance too. On an account that charges commission per lot, the fee is taken from the balance at the open or at the close, depending on the broker and platform.

Swap is interest charged or paid for holding a position overnight. On common platforms it builds up on the open position and is booked into the balance when you close.

Suppose each trade in the example also cost $0.70 commission, and the GBP/USD sell was charged $0.50 swap for one night. These figures are illustrative.

The costs add up to $0.70 + $0.70 + $0.50 = $1.90. The final balance becomes $807.00 − $1.90 = $805.10.

A trading bonus is handled differently. On many MetaTrader accounts it appears on a separate line called Credit, and the balance stays where it was.

Credit usually counts towards equity, and the broker's terms decide whether it can ever be withdrawn.

Where to find your balance on the platform

In MetaTrader 4 and 5, the Trade tab at the bottom of the screen shows a summary line with balance, equity, margin, free margin and margin level. Phone apps show the same figures, though the labels vary by app.

The account history tab lists every entry that changed the balance. Deposits and withdrawals appear as balance operations next to your closed trades, so you can rebuild the total yourself, as in the example.

If the history and the balance do not agree, look for a commission, swap or fee entry you missed. Your broker's statement is the record to rely on.

Why your balance alone can mislead you

A healthy balance can hide a bad position. A trader with a $1,000 balance and an open trade losing $600 has only $400 of equity.

Brokers judge your margin on equity. Your margin level is equity divided by used margin, times 100, so falling equity can trigger a margin call while the balance has not moved at all.

Leaving a losing trade open does not protect the balance. It only delays the moment the loss is booked, and the loss can grow in the meantime.

The balance is still the right number for some jobs, such as comparing your account with what you deposited.

If you use a risk per trade rule such as 1%, decide whether it means 1% of balance or of equity. The two differ whenever trades are open.