Margin level

Margin level is a percentage calculated by dividing your account equity by the total margin currently held for all open positions, then multiplying by 100. For instance, if your equity is $1,000 and your used margin is $200, your margin level is 500%. This metric indicates the buffer available before reaching critical margin levels set by the broker.

For a retail trader, monitoring the margin level is crucial for risk management. A decreasing margin level signals increasing risk, as available free margin diminishes. If the margin level drops to a broker's pre-defined threshold, typically 100%, a margin call is issued. Further decline, often to 50%, triggers an automatic stop out, where positions are forcibly closed to prevent negative balance. Maintaining a high margin level protects capital.