Why Account Equity Is Extremely Important
Equity directly affects your ability to trade.
1. Margin Calculation
When you open a leveraged trade, a portion of your equity is locked as used margin.
Brokers calculate your available (free) margin based on equity, not balance.
If equity drops because of floating losses:
Your free margin decreases.
Your ability to open new trades becomes limited.
Your account becomes more vulnerable to margin calls.
This is why traders must monitor equity during volatile markets.
