Notes on Apr 7, 2022
2:42 minutes
Trading Window - is a combination of Balance, Equity, Margin levels and how’s traders keep track of the money in their accounts.
Balance - is the actual money you have in your account when you have no open trades
Your balance goes up and down as you win and lose trades.
Equity - is your balance plus floating profit or losses
Free Margin - represents the money you have available in your account to trade with
Margin Level - is the ratio of your equity to your margin
The higher your margin level the more free margin you have available to trade
The lower your margin level the less free margin you have available to trade
*you want to make sure trading with proper risk management and never have too many trades open if your margin level will ever drop to 100% meaning your equity is equal to or less than your margin you will not be able to open new trades
*if your balance gets really low depending on your broker leverage the broker will automatically close out your trades to protect your account this is called being margin out or blowing an account
Margin - is the amount of money needed to open up new trade with your broker
It’s basically accessing the downpayment to get into a new trade and if you ever lose a trade you lose the downpayment as well