Margin Level

Margin level is a critical metric in forex and CFD trading that measures the health of a trading account. It is calculated as (Equity / Used Margin) x 100 and expressed as a percentage. When a trader has no open positions, the margin level is undefined because there is no used margin. As positions are opened and margin is consumed, the margin level drops. A high margin level indicates the account has significant free margin relative to its exposure, while a low margin level signals that the account is approaching its capacity or risk threshold.

Brokers use margin level as the primary trigger for protective actions. When margin level falls below a defined threshold — commonly 100% — the broker issues a margin call, warning the trader that their account is underfunded relative to open positions. If margin level drops further to the stop-out level (often 20-50%), the broker begins automatically closing positions to prevent the account from going negative. These thresholds vary by broker, regulatory jurisdiction, and account type, and they directly affect how aggressively traders can use leverage.

For introducing brokers and affiliates in the forex vertical, understanding margin level is operationally important because it influences client trading behavior and, by extension, trading volume. Clients who frequently hit margin calls may reduce their activity or churn entirely, reducing the IB's long-term lot-based commission revenue. Educating referred traders about margin management can help IBs maintain more active, longer-lived client relationships.