A trade that's on and not yet closed:while it's open, you're exposed.
A trade that has been entered but not yet closed by an opposing trade.
Open positions are subject to gains and losses from market fluctuations until they are closed.
In plain words
An open position is a trade that has been entered and not yet closed. While it is open its result is floating: it rises and falls with each change in price and becomes final only at the close.
See it move
Reached: Close
Why it matters
Open positions tie up margin, and their floating result is counted in the account’s equity, so they affect how much room the account has. A position left open past the daily rollover may also be charged or credited swap, the overnight financing amount.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
An account has a balance of 5,000 US dollars and one open position showing a floating loss of 300.
- 1Equity5,000 − 300 = 4,700 US dollars
- 2The price recovers and the floating loss shrinks to 100equity is 4,900
- 3The position is closed there, and the loss of 100 becomes final
- 4Balance5,000 − 100 = 4,900 US dollars
The balance changed only when the position was closed; until then the loss existed in equity alone.
A common mistake
A floating loss is sometimes treated as not yet real. It already reduces equity and free margin, and it is what a margin call is calculated on.
Check yourself
Educational information, not investment advice or a recommendation to trade.