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 MetaTrader 4.

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

What's Margin Required? : It is amount of money your online 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 have in your trading account.

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

In other terms, because your online broker has opened up a position for you using capital you have 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 can use to execute new trade transactions. This is amount of money in your trading account which hasn't yet been leveraged because you have not yet opened a transaction with this money - this money also is very important for you as a investor because it enables you to continue holding your open trade positions as will be explained below.

Example of What are the Margin Levels on MT4

The margin examples on MT4 Software 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 percent% of their trading capital, this 1% is equal to $2683.07, if 1 percent is equivalent to $2683.07 then 100 percentage% is $268,307

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