Imagine checking your MT5 account after a busy trading session. The balance says 10,000. Lovely. Very respectable. Perhaps even worthy of a screenshot.
Then you glance at equity: 8,800.
The account has not misplaced 1,200 behind the sofa. It is showing you two different versions of the same situation: what has already been booked, and what the open trades are doing right now.
For anyone running an Expert Advisor, particularly one that holds several positions simultaneously, that difference deserves more attention than the prettiest balance curve.
The number that waits, and the number that moves
Balance reflects completed trading outcomes and balance operations. An open losing position does not normally reduce balance until it closes.
Equity reflects the account's current value, including floating profit or loss and applicable account adjustments. It changes as open positions move.
So a balance line can look remarkably peaceful while equity is having a rather less relaxing afternoon.
This is not a bug in MT5. It is how the two measures work.
A hypothetical basket with a hidden headache
Consider an illustrative account, with all figures in the same deposit currency and no other adjustments:
- Starting balance: 10,000
- Starting equity: 10,000
- Several EA positions remain open
- Combined floating loss: 1,200
- Current balance: 10,000
- Current equity: approximately 8,800
Relative to the initial equity of 10,000, the open basket has produced a 12% equity decline. That is not necessarily the account's maximum historical drawdown; determining that requires the full equity path and its previous peaks.
Suppose the basket eventually recovers and closes with a small profit. The balance history may never show that temporary 1,200 floating loss as a closed loss.
The trader sees a successful exit. The account, meanwhile, remembers the unpleasant journey.
This matters when comparing EAs with similar closed profits. One system might have taken relatively little open risk; another might have spent hours near a dangerous margin level before recovering. The final balance alone cannot tell you which.
Balance drawdown and equity drawdown are not interchangeable
Drawdown measures a decline from a previous peak over a defined observation period.
Balance drawdown follows the balance curve. Equity drawdown follows the equity curve, so it can capture adverse floating movement before positions close.
A useful distinction when reading MT5 Strategy Tester reports:
- Maximal drawdown identifies the largest measured peak-to-trough decline in money terms.
- Relative drawdown identifies the largest measured percentage decline; the associated money amount may also be displayed.
- Balance and equity versions can have very different values.
Do not assume that a 5% balance drawdown means the account never experienced a 20% equity drawdown. Those are different measurements.
Also, a backtest's maximum is not a ceiling the live market has agreed to respect. Historical risk statistics describe the test, not a guarantee.
Why basket EAs make this especially important
An EA can hold multiple positions for perfectly legitimate strategy reasons. But combining trades into a basket does not combine away their exposure.
When several positions move against the account together, floating loss can grow while the balance remains unchanged. Depending on position sizes, instrument specifications, account settings and margin requirements, free margin and margin level can deteriorate too.
On XAUUSD, changing volatility and execution conditions can make that deterioration more abrupt than a quiet backtest period suggests.
The question is not simply, "Did the basket eventually close green?"
It is also, "What happened to the account while the basket was open?"
What an MQL5 developer can actually monitor
MT5 exposes account-level figures through AccountInfoDouble() . Relevant properties include:
double balance = AccountInfoDouble(ACCOUNT_BALANCE); double equity = AccountInfoDouble(ACCOUNT_EQUITY); double free_margin = AccountInfoDouble(ACCOUNT_MARGIN_FREE); double margin = AccountInfoDouble(ACCOUNT_MARGIN); double margin_lvl = AccountInfoDouble(ACCOUNT_MARGIN_LEVEL);
These are observations, not a complete risk-control system. They should be interpreted alongside the open positions, net exposure, instrument properties and account-specific margin rules.
A simple diagnostic is the current balance-to-equity gap:
if(balance > 0.0)
{
double gap_pct = 100.0 * (balance - equity) / balance;
PrintFormat("Current balance-equity gap: %.2f%%", gap_pct);
}
That percentage is not automatically maximum drawdown. It is a snapshot relative to current balance, and it can be negative when equity exceeds balance. For a genuine peak-to-trough equity drawdown measure, you must track the equity peak and subsequent declines over the relevant period.
If you add protective rules to an EA, test their behavior carefully. Closing positions, rejecting new entries or changing sizing during a drawdown can alter the strategy itself. A protective feature is not a magic switch that removes execution risk.
Five questions worth asking before trusting the curve
- Does the report show equity drawdown as well as balance drawdown?
- How many positions can be open at once, and what is their combined exposure?
- How do equity, free margin and margin level behave during adverse moves?
- Are the test's deposit, leverage, symbol data, modelling mode and EA settings comparable with the intended live environment?
- Does the risk assessment include prolonged adverse conditions rather than only a favourable sample?
A profitable closing balance is useful information. It is simply not the entire story.
The takeaway
Balance tells you what the account has recorded. Equity tells you what its open positions are doing now.
An EA that reaches a profitable exit after a frightening floating loss has not necessarily demonstrated low risk. It has demonstrated that this particular sequence recovered.
When evaluating automated trading, read the balance curve, equity curve, margin figures and position sequence together. Otherwise, the calmest-looking number on your screen may be the one leaving out the most interesting part.
