Margin, Margin Level and Stop-Out: The Numbers That Decide Your Account

Margin is the amount a broker freezes while a position is open. It is neither a fee nor a cost — close the trade and it comes straight back.

The four numbers on your terminal

• Balance — the result of closed trades.
• Used margin — what is locked against open positions.
• Free margin — equity minus used margin. What you can still open with.
• Margin level — equity / used margin × 100%. The health indicator that matters.

Worked example

A $2,000 account. One lot of EUR/USD at 1:100 leverage locks $1,080. At break-even, equity is $2,000 and margin level is 185%.

Price moves 50 pips against you: minus $500. Equity $1,500, margin level 139%.

Another 40 pips: equity $1,100, level 102% — the terminal starts colouring the row red. At 92 pips of loss the level hits 50% and the broker closes the position itself.

What to do about it

A margin level below 300–400% means your position is too big. The correct response is not to top the account up but to cut the lot. Adding money only pushes the stop-out further away; it does not remove the cause.

Work out margin for a specific size and leverage with the margin calculator.

Read next

• Leverage explained
• Margin call and stop-out
• Negative balance protection