Equity divided by used margin, expressed as a percentage. It is the single number brokers use to decide when to warn you and when to start closing positions.
With no positions open the figure is undefined or shown as zero. Once something is open it starts high and falls as losses mount. A broker will typically send a margin-call warning somewhere around 100% and begin closing at the stop-out-level, often 50%.
Because it is a ratio, it can be repaired from either side: deposit more equity, or close positions to release used-margin. Closing the worst loser usually helps least, since it realises the loss and only frees that position's collateral.
The number is quoted on total account equity, not per position, so a winning trade props up a losing one until it does not.
Example: equity $9,680 against used margin $3,613 gives 9,680 / 3,613 x 100 = 268%. A further $6,000 of open loss takes equity to $3,680 and the margin level to 102%, which is warning territory at most firms.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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