Instrument price
Position size (lots)
Leverage (1:X)
Contract size
enter position details
Result
Trading Decision
Margin ≠ risk
Required Margin is capital locked up, not capital at risk. Your actual risk on this trade is set by your stop-loss distance, not by this figure.
Check it against your balance
If this margin exceeds roughly 20% of your account balance for one position, you're leaning on leverage to cover an oversized position — reduce lots rather than raising leverage.
Low margin isn't a green light
A small margin figure doesn't mean it's safe to add lots. Decide position size from risk (stop distance + risk %) first, then check the margin it requires — not the other way around.
➜ Next step: Size the position by risk with the Lot Size Calculator, then confirm your maximum position at this leverage with the Leverage Calculator.
About margin
What is margin?
Margin is the collateral required to open a leveraged position. It is not a cost, but a deposit held by your broker.
Margin formula
Required Margin = (Lots × Contract Size × Price) / Leverage
Free margin
Free margin = Equity − Used Margin. When free margin approaches zero, a margin call occurs.
How to Use the Margin Calculator
- Select your currency pair — the calculator uses the correct contract size and currency for each instrument.
- Enter lot size — the position size you are planning to open.
- Enter leverage ratio — your broker's available leverage (e.g. 1:100, 1:200, 1:500). Check your account settings for your actual leverage.
- Read required margin — the amount of capital that will be locked as collateral for this position. This amount is unavailable for other trades while the position is open.
- Check free margin — enter your total account balance to see your remaining free margin after opening this position.
⚠️ Margin call warning: If your free margin falls below your broker's margin call level (usually 50–100% of required margin), positions are automatically closed at a loss. Always maintain free margin above 200% of your required margin to avoid forced liquidation.
Understanding Margin and Leverage
💳 What Is Margin?
Margin is the deposit required to open a leveraged position. It is not a fee — it is collateral held by your broker. At 1:100 leverage, opening a $100,000 position requires $1,000 margin deposit.
🔢 Leverage Ratio
Leverage amplifies both gains and losses. 1:100 leverage means a 1% price move creates a 100% return or loss on your margin. Higher leverage increases both profit potential and liquidation risk.
📊 Margin Level %
Margin Level = (Equity ÷ Used Margin) × 100. Above 200% is safe. Below 100% triggers margin call. Below 50% at most brokers triggers automatic position liquidation (stop out).
🔒 Used vs Free Margin
Used margin is locked in open positions. Free margin = Equity − Used Margin. Free margin determines how many additional positions you can open and how much adverse price movement your account can sustain.
⚡ Leverage in Prop Firms
Most prop firms provide 1:100 leverage. At proper position sizing (0.5–1% risk), you will never come close to margin call. Margin calls only happen when position sizes are too large relative to account equity.
🌍 Regulatory Limits
ESMA (EU/UK) limits retail leverage to 1:30 for major forex pairs and 1:20 for gold. US CFTC limits to 1:50. Offshore brokers offer 1:500 or higher but with reduced regulatory protection.
Margin Management in Practice
The free margin cushion
Professional traders typically keep at least 70% of their account as free margin at all times. This means never using more than 30% of account equity as used margin across all open positions. This cushion absorbs adverse price movements without triggering margin calls and allows additional positions during good setups.
Effective leverage vs nominal leverage
Your broker may offer 1:500 leverage, but your effective leverage — the actual multiple of your account balance you are controlling — should be much lower. A $10,000 account controlling $100,000 in positions is 10:1 effective leverage. Keeping effective leverage below 10:1 in forex and 5:1 in indices provides adequate risk management regardless of available leverage.
Margin and overnight positions
Margin requirements can increase overnight or over weekends, particularly for volatile instruments. Some brokers double or triple margin requirements for positions held through weekend. Check your broker's overnight margin policy before holding positions through the weekend, especially in prop firm accounts where capital preservation is critical.
📐 Safe margin rule: Required margin for any single position should never exceed 5% of account equity. Total used margin across all positions should never exceed 25% of account equity. These limits ensure no single adverse move can trigger a margin call.
Margin Formula
Required Margin = (Lots × Contract Size × Price) ÷ Leverage
Lots
Position size in standard lots (1 lot = 100,000 units of the base currency for most forex pairs).
Contract Size
Units per lot. 100,000 for standard forex lots; smaller for minis (10,000) and micros (1,000).
Price
Current market price of the pair — margin scales directly with price for the base-currency side of the trade.
Leverage
Your broker's leverage ratio for the instrument, e.g. 1:100 or 1:500. Higher leverage reduces required margin, not risk.
Worked example
2 lots of GBP/USD at 1.2650, with 1:200 leverage: (2 × 100,000 × 1.2650) ÷ 200 = 253,000 ÷ 200 = $1,265.00 required margin.
Assumption: contract size and available leverage vary by broker and instrument — always confirm the exact figures in your broker's contract specifications before sizing a real position.
Avoid These Mistakes
Sizing by margin, not risk
Treating "how much margin is available" as "how much I should trade." Available margin is a broker limit, not a risk-management decision.
Raising leverage to trade bigger
Increasing leverage to open a larger position instead of accepting a smaller one only lowers the margin figure — it does not reduce your actual dollar risk.
Treating the figure as fixed
Required margin is a snapshot at your entered price. During fast moves, margin requirements can shift with the market — it isn't a guaranteed hold.
Assuming one margin rate fits all
Forex majors, gold, and indices often carry different margin percentages at the same broker. Confirm the per-instrument rate rather than assuming forex figures apply everywhere.
Frequently Asked Questions
What is margin?
Margin is the collateral required to open a leveraged position. It's not a cost — it's a deposit held by your broker while the trade is open.
How is margin calculated?
Required Margin = (Lots × Contract Size × Price) / Leverage. Example: 1 lot EUR/USD at 1.1000 with 1:100 leverage = (1 × 100,000 × 1.1) / 100 = $1,100.
What is a margin call?
When account equity falls below the required margin level. The broker may close positions automatically (stop out) to prevent the balance going negative.
Does required margin change with leverage?
Yes — margin is inversely proportional to leverage. Doubling your leverage halves the required margin for the same position, but does not reduce the position's actual market risk; it only changes how much collateral is locked up.
References
🏛️ U.S. CFTC
Retail forex leverage limits (50:1 majors, 20:1 minors) — cftc.gov
🇪🇺 ESMA
EU retail leverage limits (30:1 majors, 20:1 gold/minors) — esma.europa.eu
📄 Broker contract specs
Exact contract size, margin percentage, and leverage tiers vary by broker and instrument — always confirm against your own broker's published specification sheet.
Last updated: 11 July 2026 · Formulas use standard 100,000-unit contract sizing unless your broker specifies otherwise.