Margin Level
Margin & Leverage
Margin level is the ratio of equity to used margin expressed as a percentage, a key gauge of account health that triggers margin calls and stop-outs when it falls too low.
What is margin level?
Margin level is the single number brokers and trading platforms use to summarize how healthy an account is at any given moment. It is calculated as:
Margin Level = (Equity ÷ Used Margin) × 100%
Where equity is the account balance adjusted for floating profit or loss, and used margin is the total collateral tied up across all open positions. It is usually displayed as a percentage on the trading platform, updating in real time as prices move.
A worked example
Suppose a trader has $2,000 of equity and $1,000 of used margin from open positions.
Margin Level = ($2,000 ÷ $1,000) × 100% = 200%
Most brokers set a margin call warning level somewhere around 100%, and a stop-out level somewhere around 50% (exact thresholds vary by broker and are published in the account terms). So if losses push this trader’s equity down to $1,000, margin level falls to 100% — right at the margin-call threshold. If it keeps falling to $500 of equity, margin level hits 50%, and the broker may start automatically closing positions to bring the account back to a safer level.
A margin level with no open positions (zero used margin) is undefined or shown as a very large number, since there’s nothing to divide against — it’s only meaningful once positions are open.
Why margin level matters
Margin level is the single clearest early-warning gauge of account risk, because it combines both sides of the equation — how much equity is left and how much is committed — into one number. Rather than watching balance or floating P/L in isolation, experienced traders keep an eye on margin level, since it is exactly what determines whether the broker will issue a margin call or force a stop-out. Keeping margin level comfortably high, by not over-leveraging or over-committing capital to open positions, is a core risk-management practice.
Quick recap
- Margin level = (equity ÷ used margin) × 100%.
- It is the key percentage brokers use to trigger margin calls and stop-outs.
- A higher margin level means a healthier, lower-risk account; a falling one signals rising danger.
- Thresholds vary by broker — always check the specific margin-call and stop-out levels in your account terms.