Open Position
Also called Open trade, Live position, Running trade, Floating position
An open position is a trade you have entered but not yet closed, such as a buy or sell in forex or shares. Until you close it, its profit or loss is unrealised and changes with every price move.
Each open trade is real money at risk, even though nothing has been booked yet. Lose track of what is open and you can end up with far more at risk than you meant to. Adding up what every stop-loss would cost tells you roughly how much you could lose if all your trades went wrong at once.
Opening and closing a position: what actually happens
You open a position when your buy or sell order is filled. You close a position by reversing the trade. On some accounts an opposite trade of the same size closes it. On others (hedging accounts) it opens a separate position, so the safe way is the close button on the trade itself. You can also close only part of it, for example half the size, and leave the rest running. Shares work the same way: you open by buying 100 shares, and your profit or loss stays on paper until you sell them.
- –Open: buy 0.10 lot
- –Then: sell 0.10 lot
- –Result: position closed
- –Open positions left: 0
- –Open: buy 0.10 lot
- –Then: sell 0.10 lot
- –Result: a separate sell position opens
- –Open positions left: 2
- –Safe way: use the close button on the trade
Margin is the part of your money the broker sets aside to keep a leveraged trade open. When you close, that margin is freed. The unrealised profit or loss becomes realised and moves into your balance.
How to calculate an open position's profit, loss and risk
A few terms first. A pip is the standard small step in a currency price; on most pairs it is the fourth decimal, so a move from 1.1000 to 1.1001 is one pip. A tick is any single change in the quoted price, however small. The spread is the gap between the price you can buy at and the price you can sell at in the same moment. A stop-loss is an order you set in advance that closes the trade automatically if price reaches a level you choose. Units is the size of the trade, counted in the pair's first currency; brokers group units into lots, shown in the account examples below.
Three numbers matter while a trade is open. The first is its floating P/L, the unrealised profit or loss. The second is its open risk, which is what you lose if your stop-loss is hit. The third is your equity, which is your balance plus the floating P/L of every open trade.
Floating P/L (buy) = (Current price − Entry price) × Units
Floating P/L (sell) = (Entry price − Current price) × Units
Open risk = Stop distance in pips × Pip value
Equity = Balance + Floating P/L of all open positions
The result is in the pair's second currency; convert it if your account is in a different one. Swap and commission charges also come out of equity while the trade is open.
A buy is valued at the bid, which is the price you could sell at right now. A sell is valued at the ask. So a new position shows a small loss the moment it opens: you start behind by the spread.
Apart from deposits, withdrawals and charges, balance changes only when you close a trade. Equity changes with every tick. If equity keeps falling while balance stays the same, your open trades are losing.
Open position maths on 500, 5,000 and 50,000 USD accounts
The figures in this section are an illustrative example. Three traders each buy the same USD-quoted pair at 1.1000 and set a stop-loss 50 pips below, at 1.0950. Price then rises to 1.1030, so each position is 30 pips in profit and still open.
On a USD-quoted pair, one standard lot (100,000 units) is worth $10 per pip. A mini lot (10,000 units) is worth $1 and a micro lot (1,000 units) $0.10.
| Account | Lot size | $ per pip | Open risk (50-pip stop) | Floating P/L (+30 pips) | Equity | Risk % |
|---|---|---|---|---|---|---|
| $500 | 0.01 | $0.10 | $5 | +$3 | $503 | 1% |
| $5,000 | 0.10 | $1 | $50 | +$30 | $5,030 | 1% |
| $50,000 | 1.00 | $10 | $500 | +$300 | $50,300 | 1% |
Each trader's lot size grows in step with the account, so the open risk is 1% on all three.
You can check this with the formula: (1.1030 − 1.1000) × 10,000 units = 0.0030 × 10,000 = $30. The chart below shows the $5,000 trader's position, with the entry, the stop and where price is now.
Total open risk: the check to run before every new trade
Suppose you have three trades open on the $5,000 account, and you have set yourself a cap of 3% total open risk. Add up what each stop would cost before you open a fourth.
Here is the decision rule. If the new trade's risk is more than the room left, shrink it or skip it. With $10 of room and a 50-pip stop, the most you can trade is $10 ÷ 50 = $0.20 per pip, which is 0.02 lot. Moving a stop to breakeven brings that trade's planned risk to about zero. Count two trades that hang on the same currency (EUR/USD and GBP/USD buys) as one bigger bet when you check the cap.
Open position mistakes that cost retail traders money
- Opening without a stop-loss. With no stop, your open risk has no limit, and the formula above cannot be calculated.
- Forgetting overnight swap. A position held past the daily rollover can pay a financing charge, called swap.
- Counting a stop moved to breakeven as zero risk on a gap-prone pair. A breakeven stop only protects you if price trades through it smoothly. If you hold the trade through a weekend or a big news release, the fill can land beyond your entry, so keep part of that trade's risk in your cap.
- Mistaking margin used for money at risk. Margin is a deposit the broker holds while the trade is open, not the most you can lose. Your real risk comes from the stop distance times the pip value, and it can be much bigger or much smaller than the margin shown.
FAQ
How long can I keep a position open?
In spot forex and share trading there is usually no fixed limit. Futures and options positions end at expiry.
What happens to my open positions if my equity falls too far?
If your equity falls below the margin needed to hold your trades, your broker can issue a margin call. If it keeps falling, the broker closes positions automatically (a stop-out), often starting with the position losing the most, depending on your broker.
Can I change the stop-loss on a position that is already open?
Yes, while the market is open; each move changes your open risk, so recheck your total cap.
Do open positions count toward my margin even when they are in profit?
Yes. Every open position ties up margin until you close it, whether it is winning or losing. A trade in profit raises your equity, which leaves you more free margin, but the margin that trade uses is only freed when you close it.