Account Balance
Account Balance
Understanding Your 'Account Balance'
Your Account Balance is one of the most pivotal terms linked to the world of trading. Essentially, it signifies the total net value currently held within your trading account. This worth includes all your deposits, withdrawals, realised and unrealised profits and losses.
Key Factors Influencing Your Account Balance
At any given moment, several factors can affect your trading Account Balance. These include profitable transactions that boost your balance, or losing trades that decrease it. Following this, the withdrawal of funds from your trading account would naturally diminish your Account Balance. On the same note, any new deposits would cause the balance to rise.
The Role of Pending and Realised Profits/Losses
It's important to grasp that your trading Account Balance can also undergo changes due to fluctuating unrealised profits or losses. These are pending earnings or losses on open trades, which are yet to be executed or realised. Only when the trade is closed do these unrealised amounts get converted into realised profits or losses, thereby affecting the Account Balance.
Why is Monitoring Your Account Balance Paramount?
Keeping track of your Account Balance is of utmost importance in trading. It reflects your ability to take on new trades and gauge your overall trading performance. Traders with high Account Balances have the luxury of managing higher risk levels than traders with lower balances. It is also a handy tool for risk management as it allows you to determine how much risk you are willing to expose your account to with each trade.
Account Balance Versus Available Balance
Make sure not to confuse your Account Balance with your 'Available Balance'. While the Account Balance denotes the total worth in your trading account at a given time, the Available Balance reflects any money that you can use immediately for trading. This calculation excludes any margin used on open trades. Therefore, the available balance is often smaller than the account balance unless all trades have been closed.
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Blog Posts with the term: Account Balance
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