Margin level

Margin level is equity divided by used margin, expressed as a percentage. It shows how far your account is from a margin call and forced closing of positions (stop out).

How it works

The formula is margin level = equity / used margin × 100%. With no open positions it is not calculated. The higher it is, the bigger your buffer. When open positions lose money, equity falls and margin level drops with it.

Brokers have two thresholds. At the margin call level (often 100%) you usually cannot open new trades and get a warning. At the stop-out level (often 50%, lower at some brokers) positions start being closed by force. For retail clients in the EU, since 2018 the close-out threshold has been no lower than 50%.

Margin level also depends on leverage: the larger your positions relative to your deposit, the lower your starting level and the smaller the move needed to reach stop out.

Example with numbers

Equity $1,000, used margin $200: margin level is 500%. Positions lose $700, so equity is $300 and the level is 150%. Another $100 loss: equity $200, level 100%, margin call. At equity $100 the level is 50% and the broker starts closing positions.

Common mistake

The beginner mistake is opening positions with almost all free margin and starting the trade at a 150–200% margin level. That leaves only a small move before stop out. Keep margin level high, several hundred percent or more, and limit risk with stops rather than waiting for a margin call.

Questions and answers

What is margin level in simple terms?

It is a measure of your account's buffer: equity divided by locked margin, in percent. The lower it is, the closer you are to forced closing.

What is a safe margin level?

There is no universal number, but higher is better. Many traders keep it in the hundreds of percent and avoid getting near 100%.

What happens if margin level falls below 100%?

At many brokers that is a margin call and you cannot open new trades. If it falls to the stop-out level, positions are closed by force.

Margin level

How it works

Questions and answers

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