Negative Balance, Positive Equity

It is possible on live accounts, the only thing that matters is equity. Balance is a number that does not exist in reality if you have an open position, all that exists accounting-wise is the equity when you have a position open.

Having negative balance is possible by simply having multiple positions open, net equity value being above zero, and a position having a floating loss that is greater than the account balance. Closing the position with the large floating loss will convert the floating loss into a "realized" loss which will then push your account balance into negative territory.

This does nothing to your margin, free margin, or account equity at the time of closing the position because all these things depend on the account equity, not balance, because equity is real and balance is not. (balance IS real when there are no open positions, but even then balance is equal to equity and equity is the real accounting entity that matters, not balance)

A lot of traders get hung up on the notion of "balance" as representing something real or tangible because this is the number we are inundated with by our banks (your checking balance is xyz...), investment funds, etc. And it is with this false premise that balance, not equity, is the metric to track that many noob traders get off on a tangent of optimizing their strategies and EA's to use very large stoploss values (huge floating losses) or thinking that their hedging strategy is working because the blue-line is going up.

The equity is all the broker cares about, it is all you should care about, it is the only thing that is real.

Thankyou very much Phillip

I never consider my balance until all positions are closed, then it just becomes your equity figure at the time of closing trades as you say.

I think more noobs should be made aware of this, and that the "Balance" shouldnt be shown at all because as you say it is not a "real" figure.

How do you like my Green line ? :-)

Its not something I would put money on, personally, the drawdown is a bit steep:

Relative drawdown 80.84%

That brings me to another question,

How can the drawdown figure be so high when I only started with $10000 ?

And it says Absolute drawdown 2125.22 which is only 21.25% of the original pot.

If you started with 80,000 and watched it go down to 18,731, you might pull the plug on the system. Put another way if someone else give you 10,000 at the start of that peak because they were impressed by your performance. The system would have blown them 3 times over.

Thankyou ubzen for the explanation, the EA I am backtesting is time based so it completely depends on where you start it.

Just another "Holy Grail" for the bin, thankfully I didnt pay for this one, Its been a long time since I paid for anything to do with forex, as it is usually available out there in one shape or another for free.