Your account shows two numbers, and most blown challenges come from watching the wrong one. Balance is the money you’ve locked in. Equity is what you’re actually worth right now — open trades included — and it’s the number your prop firm judges you on.
Balance: your closed, settled money
Balance is the cash sitting in your account from closed positions only. It moves when a trade is booked — when you close a winner, balance ticks up; when you close a loser, it ticks down — and then it sits still until the next trade settles.
The key property of balance is that it ignores everything you currently have open. You can be holding a position that’s down a fortune, and your balance won’t budge until you actually close it. That stability is exactly what makes balance dangerous to fixate on: it’s a lagging snapshot of decisions you’ve already finished, not a picture of the risk you’re carrying this second.
Equity: balance plus floating P&L
Equity is balance plus the running profit or loss of every open position:
Equity = Balance + Unrealized (floating) P&L
If your balance is 50,000 and you’re holding a trade that’s currently up 400, your equity is 50,400. If that same trade were down 400, your equity would be 49,600 while your balance still read 50,000 untouched.
Equity is the live number. It’s your true, mark-to-market net worth in the account at this instant — what you’d have if you closed everything right now. Margin, buying power, and (critically) most risk limits are all calculated from equity, not balance.
Why they differ the moment a trade is open
The two numbers are identical only when you’re flat — no open positions. The instant you enter a trade, they split:
- Price moves in your favour → equity rises above balance (floating profit).
- Price moves against you → equity falls below balance (floating loss).
- You close the position → the floating P&L becomes real, balance jumps to meet equity, and they’re equal again until your next entry.
So balance is a staircase — flat, then a step, then flat. Equity is a live line that wanders continuously the whole time a trade is open. Understanding this one relationship removes a whole category of “how did I breach when my balance was fine?” confusion.
Which number prop-firm drawdown is measured on
This is the part that fails accounts. Prop-firm loss limits are almost always measured on equity, not balance — which means an open trade’s floating loss can trip a limit before you’ve closed anything or “realised” a cent.
Picture a daily loss limit with balance untouched at the day’s start. You take a position, it moves hard against you, and your floating loss is now larger than the limit. Your balance still looks pristine. Your equity does not — and on many firms the breach is evaluated on that live equity, sometimes intraday, sometimes at specific marks. Because the exact mechanics (intraday vs end-of-day, trailing vs static, mark timing) differ by firm and by account type, always confirm the precise definition with your provider rather than assuming.
If your firm uses a trailing drawdown, the stakes are higher still: the floor can chase your equity high upward, so a floating profit you never banked can permanently raise the level you’re not allowed to fall below. It’s worth understanding exactly how that mechanic works — see trailing drawdown explained — and then pressure-testing a scenario in a prop-firm drawdown calculator before you’re live in it. Futures-style trailing rules like those at MyFundedFutures are a common place traders get caught by exactly this.
Watching equity, not balance, to stay in the game
The practical discipline is simple to say and hard to do under pressure: manage against equity in real time.
- Set your personal daily stop on equity, with a buffer inside the firm’s hard limit — never on balance.
- Treat a large floating loss as a real loss. It is one, as far as your limits are concerned. The market doesn’t care that you haven’t clicked close.
- Watch the live number during the trade, not the settled one after it.
The problem is that equity moves faster than a human watching a screen can reliably react — especially across several positions or several funded accounts at once. That’s the gap Shibiki is built to close: hard risk limits are enforced at the broker, on live equity, so an open trade that runs toward a limit gets stopped by the rule rather than by your reflexes. And because those limits sync across copied accounts, one runaway trade can’t quietly breach on the account you weren’t looking at. If you trade on MT5, those equity-based limits live where the fills actually happen.
Related: Prop-firm drawdown calculator · Trailing drawdown explained · MT5 integration