Definition
What is Margin?
Margin is the part of your equity that is set aside as collateral to keep a leveraged position open.
When you open a position, part of your equity is reserved as used margin. The rest is free margin, available for new trades or to absorb floating losses.
Margin level is equity divided by used margin, as a percentage. If it falls too low, positions can be closed automatically (stop-out).
On a prop firm account, the loss limits are usually reached long before margin becomes a problem, as long as you size positions sensibly.
Example
Equity $100,000 and two positions using $3,000 of margin: free margin is $97,000 and the margin level is about 3,333%.
At a prop firm
With 1:100 leverage on Axora Funded accounts, margin rarely limits you; the daily and maximum loss rules are what matter.
Frequently asked questions
What is free margin?
Equity minus the margin already used by open positions.
What happens if margin level is too low?
The platform starts closing positions to protect the account (stop-out).