Equity Curve

What is an equity curve in trading?

An equity curve is a line showing how a defined account value changes across time or trade order. The horizontal line normally shows time or the order of trades. The vertical line shows account value or a cumulative result.

Before reading the shape, check what the line includes. A balance curve may use only closed results. An equity curve may also include the current profit or loss from positions that are still open. Platforms and journals can use these labels differently.

Fictional five-trade XAUUSD example

Imagine the account starts at $10,000 and records five closed XAUUSD results:

+$120, −$80, +$60, −$40, +$140

The closed-result path is:

$10,000 → $10,120 → $10,040 → $10,100 → $10,060 → $10,200

The final balance is $10,200. If an open XAUUSD position is currently showing −$90, the balance can remain $10,200 while live equity is $10,110. This is why you must check whether the graph includes open positions.

What can the shape tell you?

• Upward section: the selected cumulative value increased during that part of the sample.
• Flat section: the selected value changed little during that part.
• Uneven section: open the original trades and check result size, setup, session and position size.
• Decline from an earlier peak: measure the drawdown and check which trades or open positions created it.

A rising or smooth curve does not prove discipline, safety or future profit. The line describes the recorded path. It does not explain every decision behind it.

What can change the line?

1. Deposits and withdrawals.
2. Open profit or loss.
3. Spread, commission and swap.
4. Missing or duplicate trade records.
5. How partial exits and grouped positions are counted.

What should you read with the curve?

Use a trading performance report to review the line with the original trades, trade count and drawdown. Expectancy and profit factor add other views of the same defined sample.

The trading performance metrics guide shows a practical reading order. None of these historical measures predicts the next trade.