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

Initially, we will present the various margin levels utilized across trading platforms, followed by an explanation of margin levels using an example from the MT4 platform.

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

What's Margin Required? : This is the amount of money that your broker needs from you to start a trade. It is shown as a percentage.

Defining Equity: It Represents the Aggregate Capital Presently Held Within Your Trading 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've already used it & it is not available to you.

In other terms, because your online broker has opened up a position for you using capital you've borrowed, you as a trader must keep & sustain 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 trading account which you 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 key for you as a investor and trader because it facilitates you to continue holding your open trades as will be illustrated 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, thence the total sum controlled by trader is: $268,307 dollars - this is because with this leverage option the trader has used little of his own 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