Equity refers to the amount of money in your account including any unrealized profit and loss, commissions, credit, and swaps.

Equity = Balance ± profit/loss – commissions + credit ± swaps

For example, if you deposited $10,000 and then you decided to buy EURUSD with a floating profit of $500 then the Equity of your account is $10,500.
On the other hand, if you do not have any open trades then the Equity is equal to the Balance.

Equity = Balance
The Equity of your account is displayed in the Terminal window of MT4.
In the Toolbox, if you are trading with MT5

Example 2
In the context of forex trading, equity refers to the value of a trader's account when all open positions are considered. Equity is calculated as the account balance plus or minus any unrealized profits or losses from open positions.

For example, if a trader has an account balance of $10,000 and has open positions with a current value of $2,000 in profit, their equity would be $12,000. However, if the same trader's open positions were currently at a loss of $2,000, their equity would be $8,000.

Equity is essential in forex trading because it represents the trader's actual account value at any given moment, considering both realized and unrealized profits and losses. It determines the available margin for trading, which is the amount of funds used to open new positions or increase existing ones.