# Explain the Concept of "Margin-to-Equity Ratio." ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

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## Explain the Concept of “Margin-to-Equity Ratio.”

The margin-to-equity ratio is the total margin used in a trading account divided by the total equity (value) of the account. It is a key metric for assessing the risk level of a trader's leveraged positions.

A high ratio indicates that a large portion of the account's value is tied up as margin, meaning the trader is highly leveraged and closer to a margin call. A low ratio suggests lower leverage and a larger capital buffer.

- [How Does the Concept of “Effective Leverage” Differ from Stated Leverage?](https://learn.greeks.live/path/how-does-the-concept-of-effective-leverage-differ-from-stated-leverage/)

- [What Is ‘Margin Utilization’ and Why Is It Important to Monitor?](https://learn.greeks.live/path/what-is-margin-utilization-and-why-is-it-important-to-monitor/)

- [How Does ‘Effective Leverage’ Differ from the Stated Leverage Limit?](https://learn.greeks.live/path/how-does-effective-leverage-differ-from-the-stated-leverage-limit/)

- [How Does a Trader Adjust the Leverage Level on a Cross-Margin Position?](https://learn.greeks.live/path/how-does-a-trader-adjust-the-leverage-level-on-a-cross-margin-position/)

- [What Is the ‘Maintenance Margin’ Level in Derivatives Trading?](https://learn.greeks.live/path/what-is-the-maintenance-margin-level-in-derivatives-trading/)

- [What Is ‘Effective Leverage’ and Why Might It Differ from the Platform’s Stated Leverage?](https://learn.greeks.live/path/what-is-effective-leverage-and-why-might-it-differ-from-the-platforms-stated-leverage/)

- [What Is Effective Leverage and Why Is It Important?](https://learn.greeks.live/path/what-is-effective-leverage-and-why-is-it-important/)

- [What Is the Difference between an Equity Margin Call and a Portfolio Margin Call?](https://learn.greeks.live/path/what-is-the-difference-between-an-equity-margin-call-and-a-portfolio-margin-call/)

## Glossar

### [Total Equity](https://learn.greeks.live/area/total-equity/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Definition ⎊ Total equity represents the current net value of a trader's account, calculated as the sum of all deposited capital, realized profits and losses, and the unrealized profit or loss from all open positions, minus any accrued fees or borrowing costs.

## Discover More

### [Explain the Concept of "Netting" in Institutional Derivatives Settlement](https://learn.greeks.live/path/explain-the-concept-of-netting-in-institutional-derivatives-settlement/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of "Netting" in Institutional Derivatives Settlement](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Dual-Lens-Mechanism-Abstraction-Reflecting-Decentralized-Finance-Option-Volatility-Surface-Mapping.webp)

Netting aggregates multiple offsetting obligations into a single final payment, reducing credit exposure and operational complexity.

### [Explain the Concept of "Economic Finality" in a PoS Blockchain](https://learn.greeks.live/path/explain-the-concept-of-economic-finality-in-a-pos-blockchain/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of "Economic Finality" in a PoS Blockchain](https://learn.greeks.live/wp-content/uploads/2025/10/Opaque-and-Translucent-Cyclic-Structures-Intersecting-Stylized-Binary-Asset-Handlers.webp)

Economic finality is transaction irreversibility achieved when two-thirds of staked ETH attests to a block, making reversal prohibitively costly.

### [Explain the Concept of an "Atomic Swap" in a DVP Context](https://learn.greeks.live/path/explain-the-concept-of-an-atomic-swap-in-a-dvp-context/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of an "Atomic Swap" in a DVP Context](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Bifurcation-of-Digital-Asset-Settlement-Mechanism-Crosshairs-in-Decoupled-Volatility-Surface-Mapping.webp)

A trustless, on-chain exchange of two cryptocurrencies where both sides execute simultaneously or fail, achieving DVP.

### [Explain the Concept of "Assignment" in the Context of a Covered Call](https://learn.greeks.live/path/explain-the-concept-of-assignment-in-the-context-of-a-covered-call/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of "Assignment" in the Context of a Covered Call](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Geometric-Intersection-Representing-Collateralized-DeFi-Option-Strike-Price-Convergence-In-Dark-Mode.webp)

Assignment is the obligation of the call seller to deliver the underlying asset at the strike price when the option buyer exercises their right.

### [Explain the Concept of 'Greeks' in the Context of Options Trading](https://learn.greeks.live/path/explain-the-concept-of-greeks-in-the-context-of-options-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of 'Greeks' in the Context of Options Trading](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Derivatives-Engineering-Quantum-Entanglement-in-Volatility-Surface-Modeling.webp)

The Greeks are metrics (Delta, Gamma, Theta, Vega, Rho) measuring an option's price sensitivity to various factors.

### [Explain the Concept of "Margin" in Derivatives Trading](https://learn.greeks.live/path/explain-the-concept-of-margin-in-derivatives-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of "Margin" in Derivatives Trading](https://learn.greeks.live/wp-content/uploads/2025/10/Advanced-Multi-Lens-Digital-Sensor-Array-Observing-Decentralized-Finance-Volatility-Surface-Dynamics.webp)

The oldest crypto units purchased are assumed to be the first ones sold.

### [Explain the Concept of "Volatility Skew" in Crypto Options](https://learn.greeks.live/path/explain-the-concept-of-volatility-skew-in-crypto-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of "Volatility Skew" in Crypto Options](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-View-of-Implied-Volatility-Surface-Intersections-and-Strike-Price-Vectors-in-Digital-Asset-Hedging.webp)

Volatility skew is the difference in implied volatility across strike prices; crypto often shows a put skew.

### [Explain the Concept of 'Skew' in Cryptocurrency Options Trading](https://learn.greeks.live/path/explain-the-concept-of-skew-in-cryptocurrency-options-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of 'Skew' in Cryptocurrency Options Trading](https://learn.greeks.live/wp-content/uploads/2025/10/Deconstructed-Digital-Asset-Volatility-Surface-Intersected-by-Impending-Market-Skew-Hedging-Instruments.webp)

The difference in implied volatility for options with the same expiration but different strike prices. Plain text no other syntax allowed.

### [Explain the Concept of 'Divergence Loss' as an Alternative Term for Impermanent Loss](https://learn.greeks.live/path/explain-the-concept-of-divergence-loss-as-an-alternative-term-for-impermanent-loss-2/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Concept of 'Divergence Loss' as an Alternative Term for Impermanent Loss](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalline-Geometric-Structures-Representing-NonFungible-Token-Digital-Asset-Portfolio-Stratification.webp)

A loss caused by the price ratio of the two pooled assets moving away from the initial deposit ratio.

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**Original URL:** https://learn.greeks.live/learn/explain-the-concept-of-margin-to-equity-ratio/
