Differences in margin level

Athena
05 Apr 2021, 10:44

Hi margin level formula

(Balance  + floating P/L (equity) / margin used) * 100%

if provider or you has a lower margin level these could be the reason

1) Provider/you have a higher leverage eg if provider=500 leverage and you have=100. Having less leverage meant a higher margin required

FORMULA for margin required/needed

Basically formula for margin required==> Vol of trades x contract size x entry price / leverage

eg vol of trades=0.05, contract size=100.000, entry price=1.22573 (for EURUSD)

for an account with 500 leverage margin needed/used==>0.05 x 100,000 x 1.22573 /500==>$12.26 (its a currency thus its rounded to 2 decimal)

for an account with just 100 leverage margin needed/used==> 5x as much $61.29 (5000x1.22573/100)

For some instruments eg BTCUSD there might be different margin requirements. You have to look at the instrument's specifications to calculate margin as above formula

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Formula for margin level

When a trade is open there would be floating p/l, cause by

a) market movement eg you buy 5000 EURUSD, bid price=1.22574

b) spreads

c) commission as charged by brokerage

d) swaps is any

Due to differences in margin used the same floating p/l eg $100 negative have different impact on the account,

Assume that both accounts have $1000

For account with 500 leverage, the margin used as calculated above was $12.26, thus a floating negative of $100,

Margin level[=$1000 + (-100) / $12.26] x 100%==>7340.94%

For account with 100 leverage, the margin used as calculated above as $61.29

Margin level=[$1000 + (-100) / $61.29] x 100%==>1468%

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I suggest you goto babypips.com to learn about basic concept of margin/margin level