What are the Margin Level and Margin Call?

Margin level is the ratio of equity to margin. Margin level is very important. Brokers use it to determine whether the traders can take any new positions or not. For the margin level the limit is usually 100%. This limit is called Margin Call Level and it means if your account margin level reaches 100%, you can still close your open positions, but you cannot take any new position. A margin call happens when a trading account no longer has enough money to support the open trades. This happens when there are too many floating losses. In fact, margin call level happens when your account equity equals the margin.

Margin Level is calculated by the formula of Equity/Margin. If your Margin level falls at or below 20% then your position will be closed.

MARGIN LEVEL CALCULATION: Margin Level = Equity / Margin x 100%.