Margin Level Calculator: Leverage, Free Margin, Stop Out

The formulas

Equity = balance + open profit or loss.
Used margin = lots × contract size × price ÷ leverage.
Free margin = equity − used margin.
Margin level = equity ÷ used margin × 100 %.
Leverage you really use = position value ÷ equity: this, not the account's 1:500, is what makes an account fragile.

Worked example

$1,000 account at 1:100, buy 0.10 lot of gold (10 oz) at 4,000. Used margin = 10 × 4,000 ÷ 100 = $400; margin level at the entry = 1,000 ÷ 400 = 250 %. With a 50 % stop-out the broker closes the trade near 3,919.60: there the loss is about $804, equity $196 and margin $392.

A stop loss should always be far closer than the stop-out price. Find the right size with the lot size calculator; the margin for a new trade is in the margin calculator.

Questions

What is a good margin level?

Many traders keep it above 500 %. Under 100 % you cannot open new trades, and at the broker's stop-out level (often 50 % or 20 %) positions are closed for you.

What is the difference between margin call and stop out?

A margin call is a warning level (often 100 %); stop out is where the broker starts closing your trades (often 50 %).

Does higher leverage mean more risk?

Higher leverage lowers the margin per trade, so more room before stop out for the same position. The risk comes from the position size: the leverage you really use.

Practise and trade with a plan

See fair value gaps, order blocks and liquidity drawn for you on live charts in ICC Charts, or train your eye in the free Chart Challenge game.

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Margin level calculator with stop-out price

The formulas

Worked example

Questions

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