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