<p>Margin Level is a ratio that shows the health of a trading account by comparing the account’s <strong>Equity</strong> to the amount of <strong>used <a href="/NewSite/encyclopedia/margin/" class="ency-link">margin</a></strong> currently tied up in open positions. Expressed as a percentage, it tells traders how much of their own funds remain available to absorb losses before a broker may intervene. A higher Margin Level indicates more cushion, while a low level signals that the account is approaching the threshold where a <strong>margin call</strong> could be triggered.</p>

<h2>How It Works</h2>
<p>The calculation is straightforward: <strong>Margin Level</strong> = (Equity ÷ Used Margin) × 100. Equity includes the account balance plus any unrealized profit or loss from open trades. Used margin is the sum of the margin required to maintain each open position, based on the broker’s leverage settings. As trades move in favor, Equity rises and the Margin Level increases. Conversely, adverse price moves reduce Equity, pulling the Ratio down. Most platforms, including <strong>MetaTrader 5</strong>, display this figure in real time so traders can monitor risk continuously.</p>

<h2>Why It Matters for Traders</h2>
<p>Understanding Margin Level helps traders avoid unexpected position closures. When the ratio falls below a broker‑defined threshold—often 100%—the account may receive a <a href="/NewSite/encyclopedia/margin-call/" class="ency-link">margin call</a>, requiring additional funds or the automatic closing of losing trades. Maintaining a comfortable Margin Level gives traders flexibility to withstand market volatility and stick to their strategies without forced liquidation. It also informs decisions about position sizing and leverage use, directly influencing long‑term account sustainability.</p>

<h2>Example</h2>
<p>Suppose a trader deposits $10,000 and opens a position that requires $2,000 of used margin. The trade currently shows an unrealized loss of $500, so Equity equals $9,500 ($10,000 balance − $500 loss). Margin Level = ($9,500 ÷ $2,000) × 100 = 475%. If the loss grows to $8,000, Equity drops to $2,000 and the Margin Level becomes ($2,000 ÷ $2,000) × 100 = 100%. At this point many brokers issue a margin call; any further loss would push the ratio below 100% and risk automatic trade closure.</p>

<h2>Key Takeaways</h2>
<ul>
<li><strong>Margin Level</strong> = (Equity ÷ Used Margin) × 100, shown as a percentage.</li>
<li>A higher ratio means more free margin and lower risk of a margin call.</li>
<li>Monitoring Margin Level on platforms like MetaTrader 5 helps traders manage leverage and avoid forced liquidations.</li>
</ul>