What Is Total equity?
In trading strategy, total equity refers to all assets under the management of the strategy minus liabilities.
In decentralised finance, this may also be called Total value locked (TVL) or total assets depending on the use case.
Total equity is usually expressed in US dollars. For a trading strategy, the total equity is
All assets, which may include
Cash
Open trading positions
Minus liabilities
Undercollateralised loans
If a strategy is closed and all assets can be sold without price impact and slippage, each investor will get:
investor shares * total equity / total shares
Equity curve shows how total equity has grown over time. Total equity can grow by trading profits and new deposits, and decrease by redemptions and trading losses.
See also