The amount of own funds that is held in an account (e.g., a brokerage account) to establish or maintain a position in the market. A brokerage account has two main types: a cash account or a margin account. A cash account is a type of brokerage account that requires the client (the investor) to pay the full amount for securities purchased. Therefore, equity is equal to the full cash amount paid by the client (net of any expenses owed to the broker). In a margin account, equity constitutes the excess of securities and cash holdings over debt balance.

Equity represents the total “monetary” value of all the holdings in a trading account. It consists of the monetary value of the securities held, as well as the cash deposited in the account to maintain the minimum level of own funds. The equity in a margin account is the value of securities and cash less any amounts owed to the broker/ brokerage firm.

It is also known as an account value or total equity.