How is CFD Margin Level Calculated?

We shall first explain the various cfd margin trading terms used in cfd platforms and then explain how cfd margin level is calculated using an example on MT4 software.

CFD Margin, Margin Required, Equity, Used CFDs Margin & Free margin

What's Margin Required? : It is amount of money your cfd broker requires from you to open a position. It is expressed in percents.

What's Equity? : It is total amount of capital you've in your account.

What is Used CFDs Margin? : amount of money in your account that has already been used up when buying a cfd lot, this contract is one that is displayed in the open trades. As a trader you can't use this amount of money after opening a trade because you have already used it & it is not available to you.

In other words, because your cfd broker has opened up a position for you using the capital you've borrowed, you must maintain this usable margin for your account as a security to allow you to continue using this cfd leverage he has given you.

What is Free CFDs Margin? : amount in your account which you can use to open new trade positions. This is amount of money in your account that hasn't yet been cfd leveraged because you have not yet opened a transaction with this money - this money also is very important for you as a trader because it enables you to continue holding your open trades as will be explained below.

Example of How is CFD Margin Level Calculated on MT4?

The cfd margin examples in MetaTrader 4 cfd Platform below, the set cfds trading leverage ratio is 100:1, the cfd margin which is 1% is $2683.07, therefore the total amount controlled by cfd trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1 % of their trading capital, this 1% is equivalent to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307

How is CFDs Margin Level Calculated?