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Here’s how to calculate Margin Level:: Your trading platform will automatically calculate and display your Margin Level. If you don’t have any trades open, your Margin Level will be ZERO.Margin Level is very important. Forex brokers use margin levels to determine whether you can open additional positions. Different brokers set different Margin Level limits, but…

What does “Margin Level” mean? The Margin Level is the percentage (%) value based on the amount of Equity versus Used Margin. Margin Level allows you to know how much of your funds are available for new trades. The higher the Margin Level, the more Free Margin you have available to trade. The lower the Margin Level,…

Here’s how to calculate Free Margin: If you have open positions, and they are currently profitable, your Equity will increase, which means that you will have more Free Margin as well. Floating profits increase Equity, which increases Free Margin.  If your open positions are losing money, your Equity will decrease, which means that you will…

What does “Free Margin” mean? Margin can be classified as either “used” or “free”. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader’s account that is NOT tied up in…

Let’s start with a simple answer. If your account is “flat” or does NOT have any positions open, then your Balance and Equity are the SAME. But if you do have open positions, this is when the Balance and Equity differ. This means that when you’re looking at your Balance, it is NOT the actual…

If you have open positions, your Equity is the sum of your account balance and your account’s floating P/L. Example: Account Equity When an Existing Trade  is  Losing You deposit $1,000 in your trading account. Beyoncé tweets that she’s shorting GBP/USD. Because she’s Beyoncé, you follow what she says and go short also. Price moves immediately against you and…

If you do NOT have any open positions, then your Equity is the same as your Balance. Example: Account Equity When You Have No Open Trades You deposit $1,000 in your trading account. Since you haven’t opened any trades yet, your Balance and Equity is the same.

The account equity or simply “Equity” represents the current value of your trading account. Equity is the current value of the account and fluctuates with every tick when looking at your trading platform on your screen. It is the sum of your account balance and all floating (unrealized) profits or losses associated with your open positions. As your current…

In order to understand what Used Margin is, we must first understand what Required Margin is. Whenever you open a new position, a specific amount of Required Margin is set aside. Required Margin was discussed in detail in the previous lesson, so if you don’t know what it is, please read our What is Margin? lesson first. If you open…

When trading with margin, the amount of margin (“Required Margin”) needed to hold open a position is calculated as a percentage (“Margin Requirement”) of the position size (“Notional Value”). The specific amount of Required Margin is calculated according to the base currency of the currency pair traded. If the base currency is DIFFERENT from your trading account’s currency, the Required Margin is then converted to your account…