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What is equity in forex?

In forex trading, equity refers to the amount of money in a trader's account, minus any margin used. It is the balance of funds available to a trader that is available for trading or withdrawing.



In other words, equity is the total amount of money that a trader has invested in their account, minus any open losses on their trades. For example, if a trader has a balance of $10,000 in their account and has an open trade with a $1,000 loss, their equity would be $9,000.



Equity is important in forex trading because it determines a trader's ability to open new trades and maintain existing ones. If a trader's equity falls below the required margin for a trade, their trade may be closed (a process known as a "margin call"). This is done to protect the broker and prevent negative balances, as traders are required to maintain a certain level of equity in their accounts at all times.


It is important for traders to carefully manage their equity and risk, as forex trading involves the potential for significant losses as well as gains.

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