Reading your broker's status line: Equity, Balance, Free Margin

The three numbers every platform shows you

Open any retail forex platform — MT4, MT5, cTrader, your broker's web terminal — and somewhere near the top you'll see a status line that looks like this:

• Balance: ₱50,000
• Equity: ₱48,200
• Free Margin: ₱46,500

Most beginners glance at balance, assume that's their account size, and move on. That's a mistake. Each of these three numbers tells you something different, and confusing them is one of the fastest ways to blow past your risk limits without realizing it.

Balance: your closed history

Balance is your starting deposit, plus or minus every trade you've closed. It does not move while a position is open. If you deposited ₱50,000 and you're currently holding a trade that's down ₱1,800, your balance still shows ₱50,000.

Balance only updates the moment you close.

Think of it as your account's "official" ledger — but it's always slightly out of date if you have anything open.

Equity: the live truth

Equity is balance plus (or minus) the floating profit or loss of every open position, calculated in real time.

If your balance is ₱50,000 and you have one open trade losing ₱1,800, your equity is ₱48,200. If that trade swings into profit by ₱500, equity becomes ₱50,500. Balance hasn't moved. Equity tracks reality.

This is the number that matters for margin calls. Your broker doesn't care what your balance was yesterday. It cares what your equity is right now.

Free margin: permission to trade

Free margin is equity minus the margin you've already committed to open positions.

Let's say your equity is ₱48,200 and you have ₱1,700 tied up as margin in an open trade. Your free margin is ₱46,500. That ₱46,500 is what you can still use to open new trades.

When free margin hits zero, your platform will reject any new order. When equity falls below your broker's margin call threshold (often 100% or 50% of used margin), positions start getting closed automatically.

A concrete example: three trades, one account

You deposit ₱50,000.

• You open Trade A. It requires ₱2,000 margin. Balance: ₱50,000. Equity: ₱50,000. Free margin: ₱48,000.
• Trade A moves against you by ₱1,500. Balance: still ₱50,000. Equity: ₱48,500. Free margin: ₱46,500.
• You open Trade B. It needs ₱1,800 margin. Balance: ₱50,000. Equity: ₱48,500. Free margin: ₱44,700.
• Trade B gains ₱800. Trade A is still losing ₱1,500. Balance: ₱50,000. Equity: ₱49,300. Free margin: ₱45,500.

Notice: balance never moved. Equity and free margin moved every tick.

Why beginners get this wrong

Because balance looks stable, it feels safe. It's the number that matches your deposit receipt. But if you're managing risk by watching balance, you're flying blind.

Equity is your actual account value. Free margin is your remaining room to maneuver. Both matter more than balance the moment you have an open trade.

The takeaway

Before you open your next position, make it a habit: glance at equity, check free margin, confirm you have room. This is not paranoia. It's cockpit discipline.

The status line is boring until the one day it isn't.

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