Margin Level Calculation:
Margin level (%) = (Equity/Used margin) * 100
Understanding Margin Levels:
Your margin level is crucial for determining whether you will receive a warning or be stopped out of positions on a FIFO basis, as outlined below:
100% Margin Level: Warning
80% Margin Level: Warning
50% Margin Level: Stop Outs
Monitoring Stop Outs:
To avoid stop outs, keep an eye on your Equity and Used Margin.
If your Equity falls below your Used Margin, you will start to experience warnings and possibly stop outs on a FIFO basis.
Examples of Margin Level Calculation:
Example 1
Equity: R1000
Used Margin: R750
Margin Level Calculation: (1000/750) * 100 = 133.33% (No warning)
Example 2 - Slightly lower Equity
Equity: R900
Used Margin: R750
Margin Level Calculation: (900/750) * 100 = 120.00% (No warning)
Example 3 - Equity below Used margin
Equity: R700
Used Margin: R750
Margin Level Calculation: (700/750) * 100 = 93.33% (Warning)
Key Relationships:
Your Used Margin and Equity have a semi-inverse relationship.
As your Used Margin approaches your Equity (due to increased trading activity or/and share price volatility), your margin level will decrease, bringing you closer to margin warnings and potential stop outs.