what is the margin level

[echaz]

hi guys.

could someone tell me exactly what the margin level is?
on my demo accounts i have very different levels..

on one account my level is about 250%
on another it is about 2250%
and the last is about 4000%

with which margin level should i trade?
i noticed that the level falls as soon i trade more risky..

[^eagle^]

hi guys.

could someone tell me exactly what the margin level is?
on my demo accounts i have very different levels..

on one account my level is about 250%
on another it is about 2250%
and the last is about 4000%

with which margin level should i trade?
i noticed that the level falls as soon i trade more risky..

margin levels are the ratio of available balnce versus how much money is needed in your accou nt if your trades fail. If your trade fails you get a margin call. this allows the broker to close your trades for you at a loss so they have money to pay back the lenders you borrowed from to trade.

anything above 1000% is safe. the higher the margin the safer your money is.

If you want to preserve your capital then keep it above 1000% if you want to take on more risk you can go lower.

a good rule of thumb is as your account grows you want to take on LESS risk

.many traders faLL into the trap that they believe you should take on more risk. as your account grows you should take on less risk proprtionate to your account. many large accounts have margins in the 10000% range and up.
I have a $800 usd account that i trade just below 1000%
I am going to add more money to it next week. five times as much but I am only going to nrisk twice as much before to preseve capital. i may go 3 times as much if conditions continue..

[alan]

Oh yeah..very good advice..my margin level is at 11920% so as you can see I'm a chicken..eerrrr...conservative trader :p smart one too I may add lool

[echaz]

ah ok thanks..
so i think i'll stay with 4000% that should be safe enough for my account, right?

and could you tell me how the margin level is calculated?

[alan]

could you tell me how the margin level is calculated?

Margin is calculated 2 ways: Used Margin and Free Margin. Used margin is the amount of money used to hold open positions. Free margin is the amount of funds available to place additional positions (see attachment picture #1)

The margin level is calculated by dividing the current equity in an account by the current amount of margin in use (used margin). ( view figure 2 ) After dividing the equity by the margin move the decimal two places to the right. A trader whose equity is at $1,000 and who is using a $500 of margin would divide 1,000 by 500 which of course equals 2. Then move the decimal two places to the right; thus current margin level or percentage is 200%. At 100% margin level a trader is essentially using their entire available margin. When this level drops to 50% trades will automatically be closed to help ensure that a trader is not subject to losing more money than is held in their account. (see attachment #2)