FxPro Help Centre - Glossary

Margin Level

"Margin Level" is a financial term used in trading, particularly in margin trading, which involves borrowing funds to invest in financial instruments. It is a key metric that indicates the health of an investor's trading account. The margin level is calculated as a percentage and is derived by dividing the equity in a trading account by the used margin. It is expressed as follows: Margin Level = Equity / Margin * 100. Here, equity is the total value of the trading account (including any open positions), and used margin is the amount of money that is currently being used to keep open positions. A higher margin level means that there is more free equity available to open new trades or sustain existing ones. A lower margin level indicates that a significant portion of the equity is tied up as margin, leaving less room for absorbing losses. If the margin level falls below a certain percentage (commonly set by the broker), it can lead to a margin call or automatic closure of positions to prevent further losses. This threshold is crucial for managing risk in leveraged trading.