Margin level is not the same as risk

[Shadow Trader]

Margin level shows equity as a percentage of used margin. A reading of 800 percent looks safe. It says nothing about how much can be lost on the open trades.

A trader with 1,000 dollars and a single 0.5 lot position may show a margin level of several hundred percent, yet a 40 pip adverse move erases 200 dollars, a fifth of the account. The margin number looked healthy right up until the loss.

Stop-out level, the point where the broker starts closing positions, varies from 20 to 100 percent depending on the firm. Knowing that number matters, but relying on it as a safety net is a different habit from managing risk.

Proper risk is defined by the distance to the stop and the position size, converted to a percentage of equity. Margin is only a requirement, not a risk measure.

A quick daily check: add up the stop-loss distance times size across all open trades and compare it to equity. That figure is real exposure.

Which number is monitored here, margin level or total risk at stop?