What is Margin Level in Forex Trading?
Quick Answer: Margin level is the ratio of equity to used margin expressed as a percentage: (Equity / Used Margin) × 100%. It measures account health - above 200% is safe, below 100% triggers margin call, below 50% causes stop-out.
What is Margin Level in Forex Trading?
Margin level is a percentage value that represents the ratio of your equity to your used margin, showing how much trading power remains available relative to what's currently committed. It's the single most important real-time metric for monitoring account health and avoiding margin calls. The formula is: (Equity / Used Margin) × 100%.
Understanding Margin Level Thresholds
Different margin levels indicate different account states:
| Margin Level | Status | Action |
|---|---|---|
| ≥200% | Healthy | Safe to trade |
| 100-200% | Warning | Reduce exposure |
| ≤100% | Margin Call | Add funds or close trades |
| ≤50% | Stop-Out | Automatic liquidation |
Practical Example
You have $10,000 equity with $2,000 used margin. Margin level = (10,000 / 2,000) × 100% = 500%. Very healthy. Your trades move against you, equity drops to $6,000. Margin level = (6,000 / 2,000) × 100% = 300%. Still safe but deteriorating. At $2,000 equity, you hit 100% and receive a margin call. At $1,000 equity (50%), broker closes your positions automatically.
Why Margin Level Matters More Than Balance
Your account balance can look fine while margin level screams danger. Margin level uses equity (current value) not balance (historical value). A trader with $20,000 balance but $19,500 used margin and currently losing trades might have $15,000 equity, giving them just 76% margin level - dangerously close to a margin call despite the impressive balance. Always monitor margin level in real-time, especially during volatile market conditions or high-impact news releases.
Related Terms
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