Margin level is the proportion between the borrowed funds and the trader’s funds expressed in percents. The formula is following:
(Equity / Margin) * 100 = Margin level (in %)
This indicator helps to understand how much of the deposit is loaded and which drawdown it can withstand. The margin level is displayed on the platforms in the line with the main account indicators.
Example:
Let’s calculate the margin level for the trade on EUR/USD of 0,5 lot volume with $10 000 equity. We need to know the margin size for this deal (see “Margin”). It amounts to $500, we use it in the calculation:
(10 000 / 500)*100 = 2000.
We see that the margin level equals 2000% with one such deal on the account.