With higher leverage, you can control a larger amount of capital, but you also need sufficient margin to manage it. Margin essentially acts as collateral that is held against open positions. Leverage is a tool that helps manage larger positions than your balance alone would allow, but remember that with overleveraging, it is likely that you hit your guardrails or encounter stop-out levels.
How does it work at E8 Markets?
Same mechanics, simulated capital. Your balance, margin requirements, stop-out, and leverage all behave identically to a live environment because our platform simulates it.
The difference is that no real funds are deployed. E8 Markets is a SimFi™ platform, meaning the market is real, the rules are real, and your guardrails are real. The capital is not.
Margin level vs Margin utilization
Margin utilization and margin levels are two critical risk metrics that empower traders to manage exposure effectively. By monitoring these figures, traders can proactively avoid stop-out levels, prevent overleveraging, and also help them stay within their established Challenge or Performance guardrails.
Margin Level
This is your "health status". It acts as a countdown to the Stop Out, showing how much "cushion" you have left before trades are closed.
You can understand it as a survival score. The higher the percentage, the further away you are from being forced out of your trades.
Trigger level differs based on the provider, on E8 challenges, and Performance accounts; the level is set to 100%.
Margin Level Calculation and Examples (Click here for more)
Margin Level Calculation and Examples (Click here for more)
(Equity / used margin ) x 100 = Margin level %
Platforms like MT5, cTrader or MTR will calculate this metric in real time.
In the example below (MT5 platform), managing 0.3 lot on XAU/USD with a $10,000 account is very close to failing below 100% of the margin level and potentially encountering the stop-out level.
Margin level in the MT5 Platform
Margin Level in MTR Platform
Margin Level in the cTrader Platform
Coach Play: Keeping Margin Level between 250% - 400% indicates a strong buffer and that the positions are far away from liquidation.
Note: Margin Level below 150% is a danger zone. At this point, a relatively small move against your position can trigger stop-out. Monitor closely and consider reducing exposure.
Margin utilization
Margin utilization represents the percentage of your available free margin that is currently being used to maintain open positions.
Think of it as your account’s 'used space.' It tells you how much room you have left to open more positions.
Margin Utilization Calculation and Examples (Click here for more)
Margin Utilization Calculation and Examples (Click here for more)
(Used Margin / Total account balance) x 100 = Margin utiliization (%)
In the example, a trader managing 5 lots on XAU/USD with a $200,596 balance has a margin utilization of 75%. Some traders see 75% as overexposed; others see room to add. Neither is wrong. What matters is that you know where you stand and what your drawdowns allow.
MT5 view:
Coach Play: With 10% - 20% Margin utilization, you are trading conservatively. Most of your balance remains free, giving you flexibility to add positions.
Note: Margin utilization above 80% means the majority of your balance is committed to maintaining open positions. This significantly limits your ability to react to market moves and increases stop-out risk.
Stop-out Level
Stop Out is the point at which your Margin Level drops to a specific threshold (commonly 100% or lower), triggering the automatic liquidation of your open positions. This occurs because your remaining equity is no longer sufficient to maintain your active trades. Note that hitting stop-out is not a violation by itself, like hitting drawdown limits; however, for you as a trader, it might impact your trading if trades are unexpectedly closed.
To clarify, opening one trade or multiple trades that will take 100% of your simulated margin is allowed, but it might result in stop-out closure.
More information about how to detect, follow, or avoid the stop-out level can be found here.
E8 Markets replicates real-market conditions within its simulated environment. Meaning the mechanics of margin logic and stop-out also apply to our Challenge and Performance accounts. Once Margin Level drops below 100%, all positions are automatically closed.