How Is the Margin Level Calculated?
The margin level is typically calculated as the ratio of the equity in the margin account to the used margin (the amount of margin currently securing open positions), often expressed as a percentage. Equity is the account balance plus or minus the unrealized profit or loss of all open positions.
The formula is: Margin Level = (Equity / Used Margin) x 100%. This level is continuously monitored by the exchange to determine if the account is approaching the maintenance margin threshold.
Glossar
Margin Level
Metric ⎊ Margin level is a critical quantitative metric used to assess the health and risk exposure of a leveraged trading account.
Equity
Account Value ⎊ In the context of derivatives trading, equity represents the net value of a trader's account, calculated as the total value of assets minus total liabilities.
Account Balance
Valuation ⎊ Account balance, within cryptocurrency, options, and derivatives, represents the net liquid value accessible to a participant, factoring in realized and unrealized profit and loss across open positions and collateral held.
Used Margin
Collateral ⎊ Used margin represents the portion of a trader's account equity that is currently held as collateral to support open leveraged positions.