What is Margin Level in Stocks?
We shall first explain the various stocks margin levels used in stocks platforms and then explain what stocks margin level is using an example in MT4 platform.
Stock Margin, Margin Required, Equity, Used Stocks Margin & Free margin
What is Margin Required? : It is amount of money your stocks broker requires from you to open a position. It is expressed in percentages.
What's Equity? : It is total amount of capital you have in your account.
What is Used Stock Margin? : amount of money in your trading account that has already been used up when buying a stocks lot, this contract is one that's displayed in open trades. As a trader you can not use this amount of money after opening a trade transaction because you have already used it and it is not available to you.
In other words, because your stocks broker has opened up a position for you using the capital you have borrowed, you must maintain this usable margin for your trading account as a security to allow you to continue using this stocks leverage he has given you.
What's Free Stock Margin? : amount in your account that you can use to open new trades. This is amount of money in your account which hasn't yet been stocks leveraged because you've not yet opened a trade 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 What are the Stocks Margin Levels on MT4
The stocks margin example in MT4 stocks Platform below, the set stock leverage ratio is 100:1, the stocks margin which is 1% is $2683.07, therefore the total amount controlled by the 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 capital, this 1% is equal to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307
MT4 Stocks Leverage Margin Calculation - How is Stocks Margin Level Calculated?
Used Stock Margin - $2683.07
Stocks Margin used to open trades on the MT4 example above
Stock Free Stock Margin - $13,433.48
Free Stock Margin that can be used to open new stock trades on the MT4 example above.
To Know More about Stock Leverage & Margin - How Do You Read the Topics Below:
Stock Leverage and Margin Explained
