Risk & Money ManagementMargin PercentageEquity-to-Margin Ratio
Margin Level
Equity divided by used margin, shown as a percentage; the ratio brokers monitor to decide margin calls and stop outs.
What Margin Level means
Margin Level = (Equity / Used Margin) x 100. A reading of 500 percent means equity is five times the collateral currently locked up, which is a comfortable buffer; a reading of 100 percent means equity has fallen to exactly the amount of collateral required, leaving no cushion. When no positions are open the denominator is zero and platforms typically display the field as blank, as a dash, or as an effectively infinite value.
Brokers define two thresholds on this single number. The higher one triggers a margin call warning, commonly at 100 percent, and the lower one triggers automatic liquidation, commonly at 50 percent. Both are set by the broker and by the rules of its jurisdiction rather than by any universal standard, so the same strategy can survive at one venue and be closed out at another. Traders should confirm the exact figures in their account terms rather than assuming the common defaults apply.
Worked example
An account with 8,000 dollars of equity and 7,233 dollars of used margin has a margin level of (8,000 / 7,233) x 100, or about 111 percent, meaning it is only a few hundred dollars of floating loss away from a 100 percent margin call.
Related terms
- Margin CallA broker notification that equity has fallen to a defined percentage of used margin and the account needs more funds or smaller positions.
- Stop OutThe margin level at which a broker automatically begins closing open positions to stop losses growing further.
- EquityThe live value of a trading account: balance plus the floating profit or loss of every open position.
- Used MarginThe total collateral currently locked across all open positions and pending margined orders.
- Free MarginThe portion of equity not tied up as collateral, available to open new positions or absorb losses on existing ones.
Frequently asked questions
What does Margin Level mean in forex trading?
Equity divided by used margin, shown as a percentage; the ratio brokers monitor to decide margin calls and stop outs.
How does Margin Level work in practice?
Brokers define two thresholds on this single number. The higher one triggers a margin call warning, commonly at 100 percent, and the lower one triggers automatic liquidation, commonly at 50 percent. Both are set by the broker and by the rules of its jurisdiction rather than by any universal standard, so the same strategy can survive at one venue and be closed out at another. Traders should confirm the exact figures in their account terms rather than assuming the common defaults apply.
What is an example of Margin Level?
An account with 8,000 dollars of equity and 7,233 dollars of used margin has a margin level of (8,000 / 7,233) x 100, or about 111 percent, meaning it is only a few hundred dollars of floating loss away from a 100 percent margin call.
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