IC Markets
Margin level is the single number that tells you how close your account is to a forced close-out. It is your equity divided by your used margin, shown as a percentage. When it drops, one of a few specific things is happening. This guide breaks down each, and shows the two levels you need to watch: the margin call and the stop-out.
The formula
| Balance | Your closed-trade account value |
|---|---|
| Equity | Balance plus or minus the floating profit/loss of open trades |
| Used margin | The margin locked by your open positions |
| Free margin | Equity minus used margin |
| Margin level | (Equity / Used margin) x 100, shown as a percentage |
With USD 2,000 equity and USD 400 used margin, your margin level is 500 per cent. If your open trades move against you and equity drops to USD 800, the margin level is 200 per cent. Used margin does not change while positions are open; equity does all the moving.
Why it falls
- Open trades are losing. The most common cause. Floating losses reduce equity, and lower equity over the same used margin means a lower margin level.
- You opened more positions. Each new trade adds to used margin, so the denominator grows and the margin level drops even if nothing is losing yet.
- A swap charge landed. Overnight financing is deducted from your balance at the rollover, reducing equity.
- The broker raised the margin requirement. Around major news or over weekends, a broker may increase the margin needed on volatile instruments, which raises used margin and cuts the margin level.
Margin call and stop-out
| Level | Typical value | What happens |
|---|---|---|
| Margin call | 100% (varies by broker) | Warning: no new trades, top up or reduce risk |
| Stop-out | 50% or lower (varies by broker) | Broker starts closing positions automatically, largest loser first |
When your margin level hits the margin call level, you cannot open new positions and the broker alerts you. If it keeps falling to the stop-out level, the broker closes trades one by one until the margin level recovers above the threshold. Both numbers are in your account terms.
How to keep the margin level healthy
- Size positions from a fixed 1 per cent account risk and a real stop distance, not from the maximum the margin allows.
- Keep a large buffer of free margin; a margin level comfortably above 300 to 500 per cent gives room for normal drawdown.
- Use stop-losses that close you out well before a stop-out would.
- Do not stack correlated positions; three long EUR trades is effectively one big position for margin-risk purposes.
- Watch for broker margin-requirement changes around big news and weekends.
Ivan opened five positions at once, each sized as if it were his only trade. His used margin quintupled, his margin level dropped from 600 per cent to about 130 per cent before any trade was losing, and a single news spike pushed him to a stop-out. He now caps total used margin at a fraction of his equity and treats correlated trades as one position for sizing.
A falling margin level is a risk-management signal, not a broker action. If it reaches stop-out, the broker closing your trades is the mechanism that prevents your account going deeply negative. The fix is smaller positions and real stops, applied before the level gets low.
Margin level falling means your equity is shrinking relative to the positions you are holding. Either your trades are losing, or you are holding too many. The traders who never see a margin call keep their used margin small relative to equity and let stop-losses, not the broker's stop-out, decide when a trade is over.
Frequently asked
What does margin level mean in forex?
It is your equity divided by your used margin, shown as a percentage. It measures how close your account is to a forced close-out. A high percentage is healthy; falling toward the broker's stop-out level (often 50 per cent) is dangerous.
Why is my margin level dropping?
Most often your open trades are losing, which reduces equity. It also drops when you open more positions (raising used margin), when a swap charge is deducted at the rollover, or when the broker raises the margin requirement on volatile instruments around news.
What is the difference between a margin call and a stop-out?
A margin call is a warning level, often 100 per cent, where you cannot open new trades and the broker alerts you. A stop-out is a lower level, often 50 per cent, where the broker automatically closes positions to prevent the account going negative.
How do I raise my margin level?
Add funds to increase equity, or close some open positions to reduce used margin and remove floating losses. Reducing position size on your remaining trades also helps.
Does opening more trades lower my margin level even if they are not losing?
Yes. Each new position adds to used margin, which is the denominator of the margin-level calculation, so the percentage falls as soon as you open the trade, before any profit or loss.