What are margin levels/positions?
Asked 3 years ago
Hi, I'm considering running a margin account, doing some research while wondering if it's worth it. Are margin levels or margin positions the same? Is there a healthy and a bad margin level? Please tell me how to figure out the margin and whether I should or shouldn't get a margin account? Thanks.
Andia Rispah Igobwa
Wednesday, September 22, 2021
Simply put, the Margin Level indicates how healthy your trading account is. It's the percentage ratio of your Equity to the Used Margin of your open positions, as shown on a percentage scale.
This is one way to calculate it: (Equity/Used Margin) X 100. Let's assume a trader has $5,000 in Equity and has used up $1,000 in the margin. In this example, his margin level would be ($5,000/$1,000) X 100 = 500%.
This is considered to be a very healthy account! You may determine whether or not your account is healthy by ensuring that your Margin Level is always greater than 100%.
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