What's Margin Level in Indices Trading?
We shall first explain the various indices trading margin levels used in indices platforms & then explain what indices trading margin level is using an example in MetaTrader 4.
Stock Indices Margin, Margin Required, Equity, Used Indices Margin & Free margin
What's Margin Required? : It is amount of money your indices broker requires from you to open a position. It is expressed in percents.
What's Equity? : It is total amount of capital you've in your account.
What is Used Indices Trading Margin? : amount of money in your account that has already been used up when buying a indices lot, this contract is one that is displayed in open positions. As a trader you can't use this amount of money after opening a trade because you have already used it & it is not available to you.
In other words, because your indices broker has opened up a position for you using the capital you've borrowed, you must maintain this usable margin for your trading account as a security to allow you to continue using this indices trading leverage he has given you.
What is Free Indices Trading Margin? : amount in your account that you can use to open new trades. This is amount of money in your account which hasn't yet been indices trading leveraged because you have not yet opened a trade with this money - this is also very important for you as a trader because it enables you to continue holding your open trade transactions as described and illustrated below.
Example of What are the Indices Margin Levels in MetaTrader 4
The indices margin examples on MetaTrader 4 indices Platform below, the set stock index trading leverage is 100 : 1, the indices trading margin which is 1% is $2683.07, therefore the total amount controlled by indices trader is: $268,307 - this is because with this leverage the trader has used little of his money and borrowed the rest, with this set at 100:1, trader is using 1% of their trading capital, this 1% equals to $2683.07, if 1% equals to $2683.07 then 100% is $268,307
How is Indices Margin Level Calculated?
Used Indices Margin - $2683.07
Indices Trading Margin used to open trades on MT4 example above
Free Indices Margin - $13,433.48
Free Indices Trading Margin that can be used to open new stock indices trades on MetaTrader 4 examples above.
To Learn & Know More about Indices Trading Leverage & Margin - How to Read the Topics Below:
Stock Indices Leverage and Margin Explained
