I went through the definition of margin level but haven’t understood it to the fullest. Can you please practically explain what is margin level and hoe to use it actually?
This lesson from the School might help you.
i am assuming that you are talking about using metatrader?
if so, then just forget about the “margin level%” value, because you dont need it.
there are two variables that you want to be focused on…
- margin used.
the above two values are used to determine if your broker will begin to margin call your trades, which means that they begin closing your trades which usually results in a loss…
Margin is the amount of your account capital that your broker reserves against a position that you open. There is an initial margin when the position is opened and then variable margin representing your varying open profit or loss on that position.
You can think of the initial margin as like the deposit you give to the garage when you rent a car.
The amount of margin allocated to an open position is calculated according to the level of leverage that your account is working with. I.e. it is a percentage of the nominal value of the instrument you open. The higher the leverage the lower the amount of “deposit” i.e. margin that is required.
When the position is closed, the initial margin is then released and the change in your account balance reflects the amount of profit/loss realised from the trade net of any possible costs such as commissions.
To describe it simply, margin is the amount of money that a trader needs to put forward in order to open a trade.
that’s true, but that wasn’t actually the question (the question was about margin LEVEL)
margin level is the percentage value based on the proportion of used margin to equity, as @baemax023 explained above, with the relevant link - no criticism intended, but sometimes it helps to read the thread before replying, you know?
Margin level in forex shows you the relationship between your account equity and the margin you’re using for your trades. You can check this article for further explanation: