What is Account Balance?

What is Account Balance? Lesson No 29

Alright, let’s talk about something important in forex trading: “Account Balance.” So, when you start trading forex, the first step is to open an account with a forex broker or computational fluid dynamics (CFD) provider. Once your account has been approved, you can begin depositing funds.

Now, here’s the thing, only make investments in what we call “risk capital.” Basically, it’s money you’re willing to say goodbye to if things don’t go as planned. We’re talking about money you can afford to lose, with no conditions attached.

In short, an account balance functions similarly to a trade wallet. You open an account, have it approved, and then put in some risk capital, money that will not keep you awake at night if the market decides to throw something unexpected at you. Remember, in the forex market, staying calm and analytical is essential. 

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Let us break down the concept of “Account Balance” or simply “Balance.” This is really the beginning of your trading adventure.

Visualise something like this, The amount of cash in your account is called out as your balance. It’s where you begin your trading journey. There are no bells or whistles, just real money ready to move in the market.

So, when we talk about Account Balance, we’re talking about the money you’ve earned in the trading game. It’s similar to carrying money to the betting table, except this time the game is FX. Your balance sets the stage, and from there, it’s all about making smart choices with that money.

In simple terms, your Account Balance is the cash leader, guiding you through the exciting world of trading.Keep that balance in check, and you’ll be on the right route!

Consider it this way:

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It is a simple equation.

The indicator that shows you exactly how much money exists in your trading account is your balance.

For example, congratulations if you add $1,000 to the game! With joy, your balance is now $1,000. It’s similar to checking your wallet, except in the forex fellow humans, we refer to it as Balance, and it acts like your journey’s real-dollar scorecard.

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Thus, the next time you hear the term “Balance,” consider it your trading partner in the exciting world of currency exchange.

Let’s go into the details of how your Balance interacts with the trades you make. When you enter a new trade, or as traders like to say, “open a new position,” your account balance remains stable until that position decides to close.

Now, here’s the catch, your Balance only does the movement known as cha-cha in three situations:

  • Adding More Funds: If you decide to build up your account by adding some extra cash, your Balance will offer you a signal of approval.
  • Closing a Position: The real activity begins when you decide to leave a position. This is when your Balance takes the front stage, displaying the gains or losses from the dance.
  • Swaps/Rollover Fees: Let us discuss trades, often known as rollover costs. Even though we’re mostly concerned with margins, it’s useful to know that if you leave a trade open overnight, these costs can quietly affect your Balance. Consider them the quiet tunes of the trading world, giving a little song to your overall experience. So, if you decide to leave a trade open till the next day, keep in mind that these costs may crawl in and interfere with your trading strategy. Balance is like a hidden sidekick to your main performance. Just an alert to get into a better trading rhythm!

Remember, there’s a tale of two trades, rapid ones that last a few hours and overnighters. Each has its own rhythm, and knowing how to perform actions is essential for a complete trading experience.

Let us simplify the rollover and swap processes. Consider it the backstage activity for your deals.

Rollover is the process of shifting open trading positions from one day to the next. Brokers normally handle it automatically. At the end of the day, they close your current positions and quickly open identical ones for the following working day.

  • Enter the Swap – Fee Factor:

Swaps are now involved in this rollover. A swap is a fee, and here’s how it works. it’s either given to you or taken away at the conclusion of each trading day, but only if you choose to let your trade sit overnight.

  • Getting Paid Exchange: If you receive an exchange, consider it a bonus. Cash is added to your Balance as a small reward for keeping the party going.
  • Being Charged an Exchange: On the other hand, being charged an exchange is similar to having a tab that needs to be settled. Cash is withdrawn from your Balance – a small cost for extending the trading experience.

Now, don’t worry too much about it until you’re playing with large sums. These swap costs usually seem small, but they may increase over time.

How to Monitor on Exchanges in a MetaTrader Building:

Here’s some information on your exchanges in MetaTrader, in case you were wondering, Click the “Trade” tab after opening the “Terminal” window, and you’re done! If the swaps are staying around for more than a day, you can see them through monitoring on your open positions. It’s similar to taking a peek behind the scenes of your trading show’s curtain.


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Alright, let’s keep things simple. We discussed exchanges and rollovers, which were slightly out of our essential focus but necessary to keep things accurate. Now we’ll move on to the next step in our trading journey, knowing the difference between “Unrealized P/L” and “Realised P/L” and how they affect your balance.