What is Account Balance in Forex Trading?

Before you start trading forex, you need to open an account with a retail forex broker or CFD provider. Once approved, you can deposit funds into your trading account.

The money in your account should always be risk capital, meaning funds you can afford to lose.

---

Definition of Account Balance

Your Account Balance, often referred to as just Balance, represents the amount of cash in your trading account before entering any trades.

Think of it this way:

✅ Balance = Cash Available in Your Account

For example:

🔹 If you deposit $1,000, your Balance = $1,000.
🔹 If you add another $500, your Balance = $1,500.

How Does Your Account Balance Change?

Your Balance only changes in three ways:

1️⃣ When You Deposit or Withdraw Funds

• Adding funds increases your Balance.
• Withdrawing funds decreases your Balance.

2️⃣ When You Close a Trade

• If you close a trade with a profit, the profit is added to your Balance.
• If you close a trade with a loss, the loss is deducted from your Balance.

3️⃣ When Swap or Rollover Fees Apply

• If you hold a trade overnight, you might earn or pay a swap (rollover) fee, depending on the interest rate differential between the two currencies in your trade.

---

Understanding Swap and Rollover Fees

What is a Rollover?
A rollover happens when you keep a trade open past the end of the trading day. Most forex brokers automatically roll over positions, meaning your trade is extended to the next trading day.

What is a Swap?
A swap is a fee that is either charged or paid when a trade is kept open overnight.

🔹 If you are paid a swap, the money is added to your Balance.
🔹 If you are charged a swap, the money is deducted from your Balance.

Example of Swap Impact on Account Balance

Let’s say you have an open position and keep it overnight:

💰 If the swap is + $2, your Balance increases by $2.
💸 If the swap is – $5, your Balance decreases by $5.

While swap fees are usually small, they can add up over time, especially for traders who hold positions for long periods.

---

Key Takeaways About Account Balance

✅ Account Balance = Cash in Your Trading Account
✅ Does NOT change while a trade is open
✅ Changes when a trade is closed, a deposit/withdrawal is made, or swap fees apply
✅ Rollover and swap fees impact your Balance if trades are held overnight

Understanding your Balance is essential for managing your margin, risk, and overall trading strategy.

For more forex education, visit www.dailyforex.pk 🚀