Open Trade Equity

Open trade equity is the unrealized gain or loss on an open position. The gain or loss for a position is the difference between what you paid for the asset (cost) and its current market value. For example, if you bought 100 shares of stock for $50 per share, your cost would be $5000.

If the stock is trading for $60 in the market, your position is worth $6000 or an unrealized gain of $1000. Consequently, if the shares are trading at $40, your position is worth $4000 and you have an unrealized loss of $1000. As long as your position is still “open,” meaning you still own them, the profit/loss will continue to be unrealized.

Once the positions are “closed,” meaning that you sold them, your profit/loss is now realized. The open trade equity in a futures account is settled every day. This is referred to as “marking to market.”

The investors’ margin or cash account will be credited or debited at the end of every day based on your position in the market. Even though the addition or subtraction of cash is settled daily, trades will usually not realize the net gain or loss until they “leave the market” or close out their position.

Open Trade Equity
Open Trade Equity