New to trading? 5 key trading performance stats from a real account.

The five stats, what they mean, and what they do not mean

1) Balance

• What it is: Your account after all closed trades, deposits, and withdrawals. Open profits or losses are not inside Balance yet.

• In the example: 50,432.07 USD.

• What it does not mean: It is not your real buying power while you have open trades. Think of it as yesterday’s snapshot. The market cares about Equity.

2) Equity

• What it is: Real time value of your account including open trades.

• Formula: Equity = Balance + Floating PnL + Swaps + Commissions

• In the example: 50,336.49.

• Observation: Equity is lower than Balance, so you must have a small open loss.

  • Calculation: 50,336.49 - 50,432.07 = -95.58. So you are down 95.58 on open trades.

• What it does not mean: Equity does not tell you how much margin is committed or how close you are to auto‑closure. For that you need Margin and Margin Level.

3) Margin (sometimes called Used Margin)

• What it is: The “security deposit” the broker sets aside to keep your trades open. It is based on position size, instrument, price, and leverage.

• Simple idea: Bigger positions or lower leverage require higher Margin.

• In the example: 12,345.16 is locked as deposit.

• What it does not mean: Margin is not a fee and you do not “spend” it. You get it back when trades close or when position size shrinks.

4) Free Margin

• What it is: The part of your Equity that is not tied up as Margin. It is your cushion against losses and your capacity to open more trades.

• Formula: Free Margin = Equity - Margin

• In the example: 50,336.49 - 12,345.16 = 37,991.33.

• What it does not mean: It is not spare cash to risk casually. If Free Margin goes to zero, you hit a critical limit even if you have not closed a single losing trade.

5) Margin Level %

• What it is: A health meter that compares Equity to Margin.

• Formula: Margin Level % = (Equity ÷ Margin) × 100

• In the example: 50,336.49 ÷ 12,345.16 × 100 ≈ 407.74%.

• Broker rules: At 100%, Equity equals Margin. You usually cannot open new trades. If it falls to the broker’s Stop Out level (often around 50% but this varies), the platform starts closing positions automatically to protect the account. Always check your broker or prop firm’s exact numbers.

• What it does not mean: A high Margin Level does not guarantee you are safe from large losses. It only says you have a good buffer relative to your current Margin.

How these numbers move as your open trades win or lose

Assume you do not change position size.

• If your open trades gain:

  • Equity goes up.

  • Margin stays the same.

  • Free Margin goes up because Free Margin = Equity - Margin.

  • Margin Level % goes up because Equity is bigger while Margin is unchanged.

• If your open trades lose:

  • Equity goes down.

  • Margin stays the same.

  • Free Margin goes down.

  • Margin Level % goes down.

Using our example:

• Add 2,000 profit:

  • New Equity = 50,336.49 + 2,000 = 52,336.49.

  • New Free Margin = 52,336.49 - 12,345.16 = 39,991.33.

  • New Margin Level % = 52,336.49 ÷ 12,345.16 × 100 ≈ 423.94%.

• Add 2,000 loss:

  • New Equity = 50,336.49 - 2,000 = 48,336.49.

  • New Free Margin = 48,336.49 - 12,345.16 = 35,991.33.

  • New Margin Level % ≈ 391.54%.

Key insight: with no change in position size, only Equity moves. Everything else follows from that.

How much more can your trades lose before danger

Two quick checkpoints you can read right off the numbers:

1. Loss to 100% Margin Level

   • This is exactly your Free Margin.

   • In the example: you can lose another 37,991.33 on the open positions before Margin Level hits 100% and new orders are blocked.

2. Loss to Stop Out

   • Suppose your broker’s Stop Out is 50% (this is only an example).

   • Required Equity at 50% = 0.50 × Margin = 0.50 × 12,345.16 = 6,172.58.

   • Additional loss to reach that Equity = 50,336.49 - 6,172.58 = 44,163.91.

   • At that point the platform will start closing positions automatically.

Always confirm your firm’s actual Margin Call and Stop Out percentages because they differ.

Where Margin itself comes from

For forex:

• 1 standard lot = 100,000 units of the base currency.

• Required Margin per position ≈ Notional ÷ Leverage, converted to your account currency.

• Example: 1 lot EURUSD at price 1.1000 with 1:100 leverage

  • Notional is 100,000 EUR, which is about 110,000 USD.

  • Margin ≈ 110,000 ÷ 100 = 1,100 USD.

• Open a second 1‑lot trade and your Used Margin doubles to 2,200 USD. If Equity is still 10,000, Margin Level goes from about 909.09% to about 454.55%.

Notes:

• Indices, metals, and energies have their own contract sizes and margin formulas.

• Some brokers reduce margin on fully hedged positions. Rules vary.

What these stats tell you about your trading style and risk

Pros

• They give an instant x‑ray of account health in one line.

• Equity shows real time gain or pain without closing trades.

• Free Margin and Margin Level tell you how much buffer you have.

• Margin reveals how much leverage you are actually using.

Cons

• They do not show risk per trade or where your stop is.

• They do not show correlation risk. Five trades in the same direction on related pairs can behave like one big trade.

• A high Margin Level can be misleading if you still carry oversized positions relative to volatility.

• Hedging can keep Margin Level high while hiding large exposure.

Signals to watch

• Equity far below Balance for many hours or days often means you are “holding and hoping”.

• Free Margin hovering near zero suggests you are one sharp move away from a margin call.

• Big swings in Margin during the day mean you are adding or cutting size frequently, which can be fine if planned, but chaotic if not.

• Flat Margin with rapidly changing Equity means your size is fixed but the market is volatile.

Common confusions cleared up

• No open trades: Margin is 0. Equity equals Balance. Free Margin equals Balance. Margin Level is technically undefined because you would divide by zero. MT4 or MT5 may show it as 0% or a very large number. Either way, with no used margin you are safe from a margin call.

• Swap and commissions: Overnight financing and commissions reduce Equity as time passes and can drag Margin Level down even if price does not move.

• Prop firm rules: Many firms enforce daily or max drawdown based on Equity, not Balance. That means open losses can violate rules even if you never close the trade. Always read the rulebook for exact definitions and reset times.

Simple safety framework you can apply today

1. Know your two limits

   • Your firm’s Margin Call % and Stop Out %.

2. Keep a buffer

   • Many cautious traders aim to keep Margin Level well above 300% and often above 500%. That is not a rule, just a sensible buffer.

3. Size from risk, not from free margin

   • Decide risk per trade first, then derive lot size. Do not fill the account because Free Margin looks large.

4. Use stops and accept exits

   • Stops cap downside and protect Margin Level. No stop means the market decides when you stop out.

5. Beware correlation and news

   • Correlated trades chew through Equity together. News can widen spreads and make Equity drop faster than expected.

Quick cheat sheet

• Balance - closed results only

• Equity - Balance plus real time open results

• Margin - deposit held for open positions

• Free Margin = Equity - Margin

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

• At 100% - usually no new trades

• At Stop Out - broker auto‑closes positions, starting with the biggest loser or by its internal rule

Putting our example together one last time

• Balance 50,432.07

• Equity 50,336.49

• Floating PnL = 50,336.49 - 50,432.07 = -95.58

• Margin 12,345.16

• Free Margin = 50,336.49 - 12,345.16 = 37,991.33

• Margin Level % = 50,336.49 ÷ 12,345.16 × 100 ≈ 407.74%

• You could lose another 37,991.33 on the open trades before reaching 100% Margin Level. If your firm’s Stop Out were 50%, auto‑closure would start around 44,163.91 more in losses.

Use this line as your dashboard. If you learn to read it quickly, you can make smarter decisions about size, risk, and when to step back. This explanation is for education only, not trading advice.

Bonus Tip: Learn How to Trade Without Falling Into the High Leverage Trap

One of the biggest mistakes traders make when learning how to trade is feeling confident when they see a positive unrealized profit (P&L) on their open trades, even though their Free Margin is dangerously close to 100%. It looks like everything is going well, but in reality, this is one of the riskiest positions you can be in.

When your Free Margin is that low, it means you are using very high leverage. You might feel like you are winning, but you are actually walking a tightrope. Even a small price movement against you can wipe out your gains almost instantly. Your Equity will drop, your Margin Level % will fall, and your trades can be force-closed by the broker if you hit the stop-out level.

This is how many new traders lose their accounts. They are happy with their profit and add more positions, not realizing that they are running out of room to breathe.

Learn How to Trade with Patience

Trading is like cooking a slow stew. If you rush and try to microwave it, it might look ready, but it will taste terrible. The same goes for trading. When learning how to trade, you need patience. Give your trades time to develop instead of constantly adding new ones because you see green numbers on the screen.

New traders often fall into this trap. They see their account in profit and believe they can handle more trades, but this false sense of confidence often ends with overexposure and fast losses.

Learn How to Trade by Watching the Right Number

Many people think Balance is the most important number, but that is just your past performance. The real number to watch when learning how to trade safely is your Margin Level %.

Here is how to read it:

• Above 300% means you have a comfortable buffer.

• Between 150% and 200% means you are entering the danger zone.

• Below 150% means you should treat it as a red light. You are overexposed, and your trades can be closed automatically if the market moves slightly against you.

Learn How to Trade Smarter, Not Harder

When learning how to trade, remember this rule: even if your screen shows profit, it does not mean you are safe. Always manage your leverage, keep enough Free Margin, and avoid overtrading.

Trading success comes from control, not from taking excessive risk. Be the patient cook, not the one trying to microwave your profits. Your Margin Level % is the quiet but powerful number that protects your trading account long before your Balance will.

By learning how to trade with patience, discipline, and awareness of your margin level, you build habits that separate sustainable traders from those who burn out early.

Visit investingLive.com for additional education for trading and investing. Join our Telegram channel to see how real trades are planned live, and learn how to trade through them (this is not financia advice, see them for educational purposes only. You must always do your own research and always invest and/or trade at your own ris only).