Here is how account value is calculated:

Cash: This includes the initial deposit made into the account as well as any additional cash added over time.

Value of Securities: This refers to the current market value of any securities (such as stocks, bonds, options, etc.) held in the account.

Realized Profits or Losses: These are the profits or losses from trades that have been finalized, meaning the securities have been sold. Realized profits enhance your account value, while realized losses diminish it.

Unrealized Profits or Losses: These represent potential profits or losses from trades that remain open. If the price of a security you own has increased but you haven’t sold it yet, you have an unrealized profit. Conversely, if the price has decreased, you have an unrealized loss. Although these unrealized profits or losses affect your account value, they are not "locked in" until the trade is concluded.

Minus Any Fees and Commissions: Trading typically incurs fees or commissions charged by the broker, which are deducted from your account value.

Traders keep a close eye on their account value as it serves as a crucial indicator of their trading performance. An increasing account value over time suggests that the trader is generally making profitable trades, while a decreasing value may signal the need for a change in trading strategy.

Additionally, maintaining a minimum account value is essential for many trading activities, such as buying on margin or short selling.