In order to start trading forex, you need to open an account with a retail forex broker or CFD provider.
Once your account is approved, then you can transfer funds into the account.
This new account should only be funded with “risk capital”, which is cash you can afford to lose.
The “Account Balance” or simply “Balance” is the starting balance of your account.
Basically, it’s the amount of CASH in your account.
Think of it this way:
Balance = Cash
Your Balance measures the amount of cash you have in your trading account.
If you deposit $1,000, then your Balance is $1,000.
If you enter a new trade or in trader lingo, “open a new position”, your account balance is not affected until the position is CLOSED.
This means that your Balance will only change in one of three ways. When you:
- Add more funds to your account.
- Close a position.
- Keep a position open overnight and either receive or pay swap/rollover fee.
Swap Fee
Since the topic is about margin, the concepts of swap and rollover aren’t really related but for thoroughness, we’ll quickly describe it since swap fees do affect your Balance.
Just know that there’s a difference between a trade that lasts a couple of hours and a trade you keep open overnight.
