Balance is the money in your account from closed trades only. Equity is balance plus or minus the running profit or loss on trades still open. If your balance is $100,000 and one open trade is down $3,000, your equity is $97,000. Close the trade and balance and equity meet again at $97,000.
The difference matters because firms measure loss limits on one or the other, and the two can give different answers on the same account. A limit measured on balance ignores open trades until they close. A limit measured on equity counts them at once. Blue Guardian's 1-Step Standard plan, for example, measures its daily limit on the higher of balance or equity at the reset.
This is why an account can breach while showing a healthy balance. An open trade deep underwater drags equity below the floor even though nothing has closed at a loss yet. The breach is real, and closing the trade afterwards does not undo it.
The common trap is watching balance alone. We recommend watching equity whenever you hold open trades, and checking on the rules page whether each limit on your plan is measured on balance or equity. Prop trading can cost you every fee you pay.