What is Margin Level?

Margin Level is one of the most important risk-management indicators on a trading account. It shows the relationship between the client’s own funds (equity) and the margin used, and informs the client how safe their currently open positions are.

The value is calculated using the following formula:

Margin Level = (Equity / Margin) × 100%

where:

• Equity (My trades value) – the current value of the account including floating profits and losses,

• Margin (Used Margin / Required Margin) – the amount of funds blocked by the broker as collateral for open positions.

How to interpret Margin Level?

• the higher the Margin Level, the larger the safety buffer on the account,

• a decreasing Margin Level means that open positions are generating a loss or are using too much margin relative to the available funds.

Why is Margin Level important?

On XTB accounts, the Margin Level is continuously monitored. A decrease indicates that open positions are generating losses and the available safety buffer on the account is shrinking.

When the Margin Level falls below 30%, the Stop Out mechanism is triggered. In this situation, the system automatically starts closing open positions - beginning with the one generating the largest loss - in order to limit further losses and prevent the account balance from becoming negative.

What is a Margin Call?

A Margin Call is a warning indicating that the account’s collateral level is becoming insufficient to maintain open positions.

At XTB, a Margin Call occurs when the Margin Level falls below 80%. This means that open trades are generating losses and the Free Margin is low. In such a situation, the client may lose the ability to open new positions, and further deterioration may lead to automatic closing of trades.

A Margin Call does not close positions yet - it is a warning signal that exposure should be reduced (e.g., by closing part of the positions) or that the account should be funded with additional capital.

If the Margin Level continues to fall and drops below 30%, the Stop Out mechanism is activated. The system then automatically starts closing open positions, beginning with the one generating the largest loss, to limit further losses and prevent a negative balance.

*Margin Level applies only to trading in CFD instruments.

What is Free Margin?

Free Margin is the portion of funds in the account that is not being used as margin for open positions. These are funds available for opening new trades or serving as a safety buffer for existing positions.

The value is calculated as:

Free Margin = Equity (My trades value) − Margin

where:

• Equity (My trades value) – the current account value including floating profits and losses,

• Margin (Used Margin) – funds blocked to maintain open positions.