Definition: Margin level is a percentage value that indicates the proportion of a trader’s equity to their used margin. It is calculated by dividing the equity in the trading account by the used margin and multiplying by 100. The margin level helps determine the amount of leverage a trader can use and indicates the risk of receiving a margin call.
Understanding and maintaining an appropriate margin level is crucial for successful leveraged trading. A healthy margin level ensures that traders have sufficient equity to cover potential losses, minimizing the risk of margin calls and forced liquidations. By regularly monitoring their margin level and adjusting their trading strategies accordingly, traders can manage risk effectively and maintain financial stability in their trading accounts.