Balance is the actual amount of money in your trading account based only on closed trades, deposits, and withdrawals. It does not include any profits or losses from trades you currently have open.
Balance represents your settled account funds from completed trades, deposits, and withdrawals—excluding any profits or losses from currently open positions.
Think of it like your bank account balance—it shows only settled transactions, not pending ones. Your balance changes when you close a position (locking in profit or loss), add funds to your account, or withdraw money.
It remains static while trades are open, even if those positions are winning or losing. Balance serves as the starting point for calculating other account metrics like equity and available margin, and represents your true settled capital at any given moment. The difference between your equity and used margin determines your free margin, which is the amount of funds available to open new positions. Unlike balance, equity in forex represents your account's current value including both your balance and any unrealized profits or losses from open positions.
In short: Balance reflects your account's settled funds, excluding any unrealized gains or losses from open positions.
Example in Action
A South African forex trader buys 10,000 units of USD/ZAR at 18.00 (costing R180,000) and later sells them at 18.50 (receiving R185,000), recording a gross profit of R5,000 on the trade.
In their trading account, the opening position value (R180,000) plus any transaction costs appear on the debit side, while the closing sale value (R185,000) appears on the credit side.
The R5,000 difference represents the gross profit from this direct trading activity before accounting for indirect expenses like platform fees or interest charges.
This simplified trading account shows the trader's core performance from actual currency trades, just as XYZ Traders' account showed their gross profit of ₹1,30,000 from buying and selling goods.
Understanding pip values and position sizes helps traders calculate their expected gains or losses before entering similar trades in the foreign exchange market. The lot size chosen by the trader directly impacts the monetary value of each pip movement in the currency pair.
Why It Matters
For traders operating across African markets—from Lagos to Nairobi, Johannesburg to Cairo—understanding why trading account balance matters isn't just theory.
It's survival. Balance determines how long you stay in the game. Lose it, you're done. Simple as that. It dictates risk tolerance, prevents catastrophic debt through negative balance protection, and provides the psychological cushion needed when volatility hits.
Without balance, there's no trading. Period.
Common Questions
Can I Fund My Trading Account With Mobile Money Like M-Pesa or MTN?
Yes, many African forex brokers accept M-Pesa, MTN Mobile Money, and similar platforms for account funding. Processing typically takes 24 hours. Traders must verify their broker supports mobile money and complies with regional e-money regulations.
Do African Brokers Charge Withdrawal Fees in Local Currency or USD?
African brokers charge withdrawal fees in both local currency and USD, depending on the payment method and broker policy. Local methods like mobile money typically use local currency, while international transfers default to USD denomination.
What Minimum Balance Do Regulated South African Brokers Typically Require?
FSCA-regulated South African brokers typically require minimum deposits ranging from $0 to $200, with popular options at $5, $10, $50, and $100. Some brokers like XM (Official Site 🔗) start at $5, while others require $2,000 or more.
How Do Currency Controls in Nigeria or Zimbabwe Affect Account Withdrawals?
Currency controls in Nigeria and Zimbabwe impose strict withdrawal limits, mandate CBN or central bank approvals, delay foreign currency access, enforce unfavorable official conversion rates, and require extensive compliance documentation—often pushing traders toward parallel markets despite regulatory risks.
Are Account Balances Protected if My Broker Loses Their FSCA License?
Segregated client funds offer some protection, but FSCA license loss does not guarantee full recovery. South Africa lacks deposit insurance for trading accounts; actual protection depends on broker compliance, solvency, and proper fund segregation at license withdrawal.
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