Margin Level Calculation: How to Find the Price Range to Stop-Out (With Examples)
Unsure how to calculate margin level so you can tell how much room you have before stop-out?
In short, find margin level as equity / required margin, then divide the amount you can lose before the stop-out level by the value of 1 pip.
This article covers the definitions and formulas, a USDJPY example, and cautions when raising lots. By the end, you can work out the range you can withstand before opening a position.
In short: margin level is equity / required margin
- Margin level (%) = equity / required margin x 100
- Equity is the account balance plus unrealized profit and loss
- The stop-out level differs by broker. Check the broker's page
- Range you can withstand = (equity - equity at the stop-out level) / value of 1 pip
The margin level formula and three terms
Margin level is a ratio showing how much room your account has. The lower the value, the closer you are to forced closure.
| Term | Meaning | How to calculate |
|---|---|---|
| Equity | The real funds in the account right now | Account balance + unrealized profit and loss (may include bonuses, etc., depending on the broker) |
| Required margin | The amount set aside to hold a position | Trade size x rate / leverage |
| Margin level | Equity as a ratio of required margin | Equity / required margin x 100 |
For example, suppose you have a balance of ¥100,000 and hold a position with required margin of ¥15,000. If unrealized profit and loss is zero, margin level is about 667%.
What is the stop-out level? Differences by broker
Stop-out is a mechanism that automatically closes positions when margin level falls below a set level. The level differs by broker and account type.
As general examples, there are settings such as 100%, 50%, 20% and 0%. These are general figures, not those of a specific broker.
- The higher the level, the earlier positions are closed, while more of your balance remains
- The lower the level, the wider the range you can withstand, but the larger the loss
- The margin call (warning) level and the forced-closure level may be set separately
- Check each broker's level on the broker's page and in its official account guide
Example: finding the price range to stop-out
To find the range to stop-out, work back from the equity at the point where margin level reaches the stop-out level. Divide the amount you can lose by the value of 1 pip.
| Lots held | Required margin | Margin level right after opening | Range to stop-out (20% level) |
|---|---|---|---|
| 1 lot | ¥15,000 | approx. 667% | approx. 97 pips |
| 3 lots | ¥45,000 | approx. 222% | approx. 30 pips |
| 5 lots | ¥75,000 | approx. 133% | approx. 17 pips |
| 6 lots | ¥90,000 | approx. 111% | approx. 13.7 pips |
Even with the same balance, the range you can withstand narrows sharply as lots increase. With 3 lots, the calculation shows a close-out at about 30 pips, when equity falls to ¥9,000.
How the range changes with a different level
| Stop-out level | Equity at close-out | Amount you can lose | Range you can withstand |
|---|---|---|---|
| 100% | ¥45,000 | ¥55,000 | approx. 18.3 pips |
| 50% | ¥22,500 | ¥77,500 | approx. 25.8 pips |
| 20% | ¥9,000 | ¥91,000 | approx. 30.3 pips |
| 0% | ¥0 | ¥100,000 | approx. 33.3 pips |
Cautions about raising lots to chase cashback
Cashback is proportional to trading volume, so you may be tempted to raise lots. However, losses are also proportional to lots, and margin level falls.
We plan to post amounts on each broker's page at launch, and they are still being confirmed. Even once amounts are set, the basic rule is to set lots from your acceptable loss and the range you can withstand.
Enter your balance, lots, leverage and level to check the price range to stop-out.
Check the range with the stop-out calculatorFAQ
Q.What is the formula for margin level?
Divide equity by required margin and multiply by 100. Equity is the account balance plus unrealized profit and loss. How bonuses are treated differs by broker.
Q.What percentage is the stop-out level?
It differs by broker and account type. It ranges from 100%, 50%, 20% to 0%, so check the level of the broker you trade with on its page and in its official guide.
Q.How do I calculate the price range to stop-out?
Subtract the equity at the stop-out level (required margin x level) from your current equity, then divide by the value of 1 pip. For 1 lot of USDJPY, 1 pip is about ¥1,000.
This article is for information purposes only and is not investment advice. Conditions may change, so please check each broker's official page for the latest information. Offshore FX and CFD trading carries a risk of losses exceeding your principal.
