How is Margin Level Calculated?

We shall first explain the different margin trading terms used in platforms and then explain how margin level is calculated using an example on MetaTrader 4.

XAUUSD Margin, Margin Required, Equity, Used Margin & Free margin

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

What is Equity? : It is the total sum of trading capital you have in your account.

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

In other words, because your online broker has opened up a trade transaction for you using the capital you have borrowed, you must preserve this usable margin for your trading account as a collateral to allow you to continue using this leverage he has given to you.

What's Free Margin? : amount in your account which you can use to execute new transactions. This is the sum of money in your trading account that has not yet been leveraged because you have not yet opened a transaction with this money - this money also is very important for you because it enables you as a trader to continue holding your open transactions as will be shown below.

Example of How is Margin Level Calculated on MT4?

The margin example on MetaTrader 4 Platform below, the set leverage is 100 : 1, the margin which's 1 percentage% is $2683.07, hence the total sum controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest of the amount, with this set at 100:1, the trader is using 1 percentage% of their trading capital, this 1 percent% equals to $2683.07 dollars, if 1 % is equivalent to $2683.07 dollars then 100 % is equal to $268,307

Example of How is Margin Level Calculated in MT4? - Example of Margin in MetaTrader 4 Platform Explained