Margin Level in Forex: Usage & Calculation per ICT (3 Examples)

When you trade Forex, you are not always using your own full capital.

Instead, brokers provide leverage, allowing you to control larger positions with a smaller amount of money.

This is where margin comes in.

To keep your trades active, brokers calculate something called Margin Level.

Understanding this is important so that you don’t over-leverage your account and end up facing a margin call or stop-out.

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1. What is Margin Level as per ICT?

Margin Level shows how safe or risky your trading account is at the current moment.

The formula is:

Margin Level (%) = (Equity ÷ Used Margin) × 100

• Equity = Balance + Floating Profit/Loss.
• Used Margin = The margin locked for your open trades.

The higher the margin level, the safer your account is. The lower the margin level, the riskier it becomes.

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2. ICT Perspective on Margin

In ICT (Inner Circle Trader) concepts, trading with risk management is key. ICT emphasizes using margin responsibly:

• Avoid using all of your available margin.
• Always keep enough free margin to withstand drawdowns.
• Use position sizing so that even with leverage, your risk per trade stays small (like 0.5% – 1% of equity).

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3. Margin Level Example as per ICT

Example 1: Safe Margin Level

• Account Balance = $1,000
• Open trade requires margin = $100
• No floating profit or loss (Equity = $1,000)

Now,
Margin Level = (1,000 ÷ 100) × 100 = 1,000%

This is very safe. You are using only a small part of your account for margin.

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Example 2: Risky Margin Level

• Account Balance = $1,000
• Open trade requires margin = $500
• Floating loss = $200
• Equity = $1,000 – $200 = $800

Now,
Margin Level = (800 ÷ 500) × 100 = 160%

This is much lower. If losses increase, the margin level can fall closer to 100%. At that point, brokers may send a margin call warning.

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Example 3: Margin Call Situation

• Account Balance = $1,000
• Used Margin = $800
• Floating Loss = $400
• Equity = $600

Now,
Margin Level = (600 ÷ 800) × 100 = 75%

If the broker has a stop-out level at 50%, your trades may automatically close to protect against further losses.

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4. Practical Usage of Margin in ICT Trading

1. Keep Margin Level Above 500%
   – ICT recommends not over-leveraging. A margin level above 500% means you are trading safely with small positions.
2. Use Proper Risk Per Trade
   – Even with leverage, limit risk to a small percentage of your equity (like 1%).
3. Monitor Equity, Not Just Balance
   – Balance doesn’t change until you close a trade, but Equity reflects your real-time account health.
4. Avoid Margin Calls
   – Don’t let your margin level drop too low. Always leave enough free margin for market fluctuations.

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5. Summary

Margin Level in Forex is a percentage that shows how much of your account is being used as margin for open trades.

• High Margin Level (e.g., 1000%) = Safe, low risk.
• Low Margin Level (e.g., 100% or less) = Dangerous, close to margin call.

ICT’s approach focuses on controlled risk and never over-leveraging.

By keeping margin level high and using small, calculated positions, traders can survive drawdowns and trade in alignment with institutional methods.