The margin level is a risk management indicator that helps you understand the influence of the currently opened positions on your account.
Margin level is a mathematical equation that effectively tells the trader how much of their funds are available for new trades.
The higher the margin level, the higher the amount of cash available to trade.
The lower the margin level, the lower the amount of cash available to trade, and this is where an account could be subject to a margin call.
How is margin level calculated?
It is calculated with the following formula:
Margin level = equity/margin x 100%
If you don't have any trades open, your margin level will be zero. Once a position is opened, the margin level will depend on several factors such as:
Volume
Type of market
Leverage
Margin level example
The xStation platform automatically calculates your margin level and you can view it at the bottom of your screen.
In the example above, the margin level is calculated in the following way:
Margin level = 103490.38/2500 x 100% = 4139.62%