Formula

Equity Ratio Formula for Successful Forex Trading

4 min read

The equity ratio formula is an important tool in forex trading because it helps traders calculate how much of their trading capital is available for the risk of trade. This ratio is also known as the “trading margin” and it is calculated by dividing the amount of equity (cash) in the trading account by the amount owed in the position (leverage). By calculating and monitoring the equity ratio of a trading account, traders make sure they’re not taking on too much risk and that they always have a cushion of available funds in case of unexpected losses.