Published by FXEQ Trading Limited

Trading in financial markets offers exciting opportunities, but it also comes with risk. At the core of managing that risk is understanding two key metrics in your trading account: Margin Level and Equity Fluctuation.

Let’s break these down in simple, practical terms so you can protect your account and trade smarter.

🧮 What is Margin Level?

Margin Level is a ratio that shows how much free margin you have compared to the used margin in your account. It’s calculated like this:

Margin Level = (Equity / Used Margin) × 100

It’s a real-time indicator that brokers use to determine how close you are to a margin call. A higher margin level means you’re in a safer zone. A lower margin level (typically below 100%) may trigger automatic position closures (stop-outs) to protect the broker from loss.

Example:

• Equity: $1,000
• Used Margin: $250
• Margin Level: (1000 / 250) × 100 = 400%

That’s healthy. But if your equity drops to $250, the level falls to 100% — danger zone.

---

📉 What is Equity Fluctuation?

Equity is your account balance plus or minus your open profits or losses. It fluctuates constantly as the markets move.

Equity = Balance ± Floating P&L

This fluctuation is critical — it directly affects your margin level. If your trades are losing, your equity falls. When equity drops but margin stays fixed, margin level drops. If your equity drops too much, you may no longer have enough to maintain open trades.

Think of equity as your trading health monitor. It must be watched closely, especially during high volatility.

---

🚨 Why Risk Management Matters

Without a clear understanding of margin level and equity fluctuation, traders may:

• Over-leverage
• Get caught in fast-moving drawdowns
• Trigger margin calls or stop-outs without warning

Proper risk management means:

• Using reasonable lot sizes
• Setting stop losses
• Avoiding overexposure in correlated instruments
• Monitoring margin and equity throughout the day

---

💡 Pro Tip from FXEQ

Always aim to keep your margin level above 300%. It gives you breathing room during volatility. And use equity-based stop rules, not just price-based ones.

---

✅ Final Thought

Trading is not just about strategy. It’s about survival. Understanding your margin level and tracking equity fluctuation is the difference between longevity and liquidation.

At FXEQ Trading Limited, we help traders learn, not gamble. Risk management is the first skill of any successful trader.