# Margin Trade: How do I calculate my margin level based on leverage and price?

Hoping someone could help a noob. Let's say I have 10,000 USD in an account and want to short ETH with 1,000 USD with 5x leverage (5k USD total).

With this, my margin level be 1,000%, yes? (10,000 / 1,000)x100

If the price of ETH were then to go down 20% after opening this position, what would my margin level be?

Before the price change, you have:

1. +\$10,000 cash deposited
2. +\$5,000 from sale of eth borrowed
3. -\$5,000 worth of ETH owed

So equity is \$10,000, margin used is \$5,000/5.

After the price change, you have:

1. +\$10,000 cash deposited
2. +\$5,000 from sale of eth borrowed
3. -\$4,000 worth of ETH owed

Now, equity is \$11,000, margin used is \$4,000/5 or \$800. That gives a margin level of 1375%.

• Thanks, David! So if ETH were to go UP 20%, it'd be the following: +\$10,000 cash deposited +\$5,000 from sale of eth borrowed -\$6,000 worth of ETH owed Equity is now 9,000. Margin used = 6000/5 or \$1200 (9,000 / 1200) x100 = 750% as margin level? – Joe Nov 18 '18 at 23:34
• @Joe Yes, that's correct. – David Schwartz Nov 18 '18 at 23:49