Equity means how much money you have in your brokerage account. For many brokers you will often see two values displayed if you have open trades: equity and balance. At any time that all your trades are closed and you are flat then balance = equity. If you have open trades then balance will be going up and down based on the moment-by-moment fluctuations as the trades you are in go into and out of profit. The Calculator does not use balance, instead using the less variable value of equity.
Tip: When you first set up a new account, enter a value – any value – as your equity, just to get the process of setting up a new account started.
The best way to use the Calculator is to keep your equity settings matching the equity in your accounts as closely as possible. This is known as Adaptive Position Sizing and has the potential to increase profit for your overall trading, for some traders by 20% – 400%!
The following video goes into depth about how such a dramatic profit boost can be achieved: