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Business Definition for: average equity
average equity

average daily balance in a trading account. Brokerage firms calculate customer equity daily as part of their procedure for keeping track of gains and losses on uncompleted transactions, called mark to the market . When transactions are completed, profits and losses are booked to each customer's account together with brokerage commissions. Even though daily fluctuations in equity are routine, average equity is a useful guide in making trading decisions and ensuring sufficient equity to meet margin requirements .

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