What is Margin Level in Forex? - Margin Level in Example

We shall first explain the different margin levels used in platforms & then explain what margin level is using and example on the MT4 Platform.

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

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

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

What is Used Margin? : amount of money in your account which has already been used up when buying a currency contract, this lot is one that is illustrated and displayed in open trade positions. You can't use this amount of money after registering a trade order transaction because you have already used it & it is not available to you.

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

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

Explanation of What are the Margin Levels on MT4 Platform

The margin examples on MT4 Platform below, the set leverage ratio is 100:1, the margin which is 1 % is $2683.07, therefore the total sum controlled by 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 % of their trading capital, this 1% is equal to $2683.07, if 1 percent is equivalent to $2683.07 then 100 % is $268,307

What is Margin Level in Forex? - Margin Level in Example Explained