Trading in financial markets is a high-risk activity. However, it is able to bring high profits. To be successful, you need to learn a lot of knowledge and skills. Beginners find it difficult to understand the abundance of new terms. Below we will tell you about what is capital in trading.
Key Aspects
Forex Shares is one of the key indicators of trading account. Indicates the amount of free money for the deposit. In other words, its value is the amount of capital that can be used in trading.
Trading capital is calculated according to a simple formula: balance is variable loss – variable income. Open positions are used for calculations at calculation time. Let’s take a small example. Let’s say you have a deposit of $500. It has two open offers. For one of them, the loss is $60. Earnings on 2 equals $80.
Forex equity in this case is calculated as: 500 – 60 + 80 = 520 USD. It should be understood that this indicator is dynamic. Changes in profits and losses on open positions will immediately affect it.
Equity helps you determine your current account balance. Thanks to this, the entrepreneur is able to make trading decisions quickly. Any investor or speculator of shares should be able to work with this indicator. This can help determine the effectiveness of trading strategies.
See Equity is available on the trading platform. If you are using MeatTrader 4, you need to go to the Terminal. Then you need to select “Free Funds”. This procedure is done in just a few clicks.
Equity plays an important role in capital management. Mani Management is at the heart of profitable Forex trading. You must be able to manage your balance. To do this, you need to properly act as profitable transactions and with unprofitable ones.
Also become a successful trader you have to follow certain rules. You can not risk in one transaction an amount that exceeds 5-10% of the deposit. Otherwise, the loss will accumulate and can lead to serious losses and even a complete “drain” of the deposit. Equity helps you control the situation and deprives you of the need to perform independent calculations and calculations. In the terminal this number is automatically converted if the amount of the variable loss or profit changes.