Margin level

What margin level means

Margin level is a percentage that shows how much of your account equity is available compared with the margin your open positions currently use. It is calculated as equity divided by used margin, multiplied by 100. The higher the figure, the larger your safety buffer. As it falls, the account is closer to a margin call and, further down, to automatic closure of positions.

You will find margin level on trading platforms such as MetaTrader, alongside balance, equity, margin and free margin. It is displayed only when positions are open, because with no used margin the ratio is undefined. It is among the most useful single numbers in a leveraged account, because it combines the effect of price moves, position size and leverage into one figure.

Brokers use margin level to set their rules. A common design has a margin call threshold, such as 100 percent, and a stop-out threshold lower than that, such as 50 percent or lower. These are not universal, and regulators in some regions require specific closure levels for retail clients. The numbers are set out in the client agreement.

How it works

The formula is:

• Margin level = (equity / used margin) x 100 percent.

Equity equals the account balance plus any floating profit or minus any floating loss. Used margin is the sum of margin required by all open positions. Free margin equals equity minus used margin.

Several things change margin level:

• Price moves: floating profit raises equity and margin level; floating loss lowers it.
• Opening positions: it increases used margin, which lowers margin level immediately.
• Closing positions: it releases margin and usually raises margin level.
• Deposits and withdrawals: they change balance and equity.
• Margin requirement changes: if the broker raises the rate, used margin increases and margin level falls without any price move.

A margin level of 100 percent means equity equals used margin, so free margin is zero. Above 100 percent there is free margin; below it, the account is using more than its equity covers on a simple basis, and the broker will typically act. The relationship is not the same as leverage: margin level depends on equity, so a profitable position raises it even though leverage is unchanged.

A worked example

The numbers are illustrative only. An account has a balance of 5,000 EUR. The trader opens two positions requiring 1,000 EUR and 500 EUR of margin.

1. Used margin = 1,000 + 500 = 1,500 EUR.
2. With no floating profit or loss, equity = 5,000 EUR.
3. Margin level = 5,000 / 1,500 x 100 = about 333 percent.
4. Free margin = 5,000 minus 1,500 = 3,500 EUR.

Now the positions together show a floating loss of 2,000 EUR.

1. Equity = 5,000 minus 2,000 = 3,000 EUR.
2. Margin level = 3,000 / 1,500 x 100 = 200 percent.

The trader opens a third position that requires 1,500 EUR of margin.

1. Used margin = 3,000 EUR. Margin level = 3,000 / 3,000 x 100 = 100 percent.
2. Free margin = 0. On many accounts this would trigger a margin call and prevent new orders.

If losses grow by 1,500 EUR more, equity is 1,500 EUR and margin level is 1,500 / 3,000 x 100 = 50 percent, which could be a stop-out level for some brokers. The same account would have survived much longer if the third position had not been opened. This shows how new exposure reduces the buffer immediately.

Why it matters

Margin level is an early indicator of how close the account is to forced action. Watching profit and loss alone can hide the problem, because a position may show a modest loss while margin level is already low due to heavy use of margin. A healthy margin level gives space to ride out normal swings and avoids closure at inconvenient prices.

It also helps compare risk between accounts. Two traders with the same balance can have very different margin levels, depending on how much exposure they hold. Thresholds differ between brokers and account types, and retail accounts under strict rules often have defined closure levels.

How to use it in practice

• Keep margin level far above your broker's margin call level, not just above it.
• Check it before and after opening each trade.
• Set a personal minimum, for example never going below a level you choose in advance, as part of a risk plan.
• Recalculate before weekends and events, when margin requirements may rise.
• Remember hedged and correlated positions all consume margin.
• Use platform alerts where available.
• Learn the margin call and stop-out thresholds in your agreement.

Common mistakes and misconceptions

• Treating 100 percent as safe. At that level free margin is zero.
• Looking only at profit and loss. Margin level shows the buffer.
• Assuming it changes only with price. New positions and requirement changes also move it.
• Mixing up margin level with leverage or margin percentage.
• Expecting every platform to show the same value. Definitions can differ slightly, for example with credit or bonuses.
• Ignoring that closure can happen faster than you can respond.

Risks and limitations

Margin level is a snapshot. It can fall quickly in volatile markets, and gaps can bypass thresholds. A high margin level does not mean a position is sound, only that the account has buffer. Thresholds and formulas differ by broker, and some include bonuses or credit in equity. This entry is educational, not advice.

How Brokeli looks at it

We record the margin call and stop-out levels expressed as margin level for each broker entity and note whether the formula includes credit or bonuses. These details come from published research snapshots and legal documents, so a reader can see how much buffer the rules leave. We regard clear definitions as a mark of transparency, while the thresholds themselves are risk settings to understand, not to rank.