Every morning I post my performance figures — I thought I would quickly explain what they mean.
Equity: Equity = cash holding + profit or loss on open positions. If you want to know how my open positions are doing day-to-day, follow the equity figures.
Cash: Cash = cash holding only. So any trades that are showing a profit don’t count towards the cash figures until I have closed the trade and actually banked the profit. This is the metric that I like to watch — profits are not real until you have banked them.
If you had an investment in a trading fund, all you would see would be the equity figure. This is because, if you sell out, you get your share of the open positions as well as your share of the cash. But I can’t sell out of myself, and I don’t care if a position makes me 10% and then drops back to 6% before I take a profit — perhaps I could have taken profits earlier, but what really matters is that I have added 6% to cash, not that I have “lost” 4% from equity.