What the leverage calculator does
Leverage lets you control a position worth more than your account. Brokers quote it as a maximum, such as 1:30 or 1:500, and that number sets how much margin they lock up when you open a trade. What determines your risk is the effective leverage: the size of your positions compared with your equity. The calculator shows both, together with the margin used, the free margin, the margin level, what a 1% price move is worth, and how far price can move against you before a margin call, a stop-out and the loss of all your equity.
How to use it
- Choose long or short.
- Enter your account equity (balance plus or minus open profit and loss) and the total value of the position in dollars. For forex, position value = lots × 100,000 × price for a pair quoted in dollars: one lot of EUR/USD at 1.1600 is $116,000.
- Enter the broker leverage for that instrument and the entry price. Retail clients in the EU and the UK are usually capped at 1:30 on major forex pairs and lower on other markets; brokers elsewhere may offer far more.
- Enter your broker's margin-call and stop-out levels. 100% and 50% are common on MT4 and MT5, but check your account's terms.
The formula
effective leverage = position value ÷ equity
margin used = position value ÷ broker leverage
free margin = equity − margin used
margin level = equity ÷ margin used × 100%
move to level L = equity ÷ position value − L ÷ broker leverage
price at that move = entry × (1 − move) for a long
= entry × (1 + move) for a short
The move formula comes from setting the margin level after an adverse move equal to the broker's level: (equity − position value × move) ÷ margin used = L. A move of equity ÷ position value — one divided by the effective leverage — wipes out the equity entirely.
Worked example
A $10,000 account buys one lot of EUR/USD at 1.1600, a $116,000 position, with 1:30 broker leverage, a margin call at 100% and a stop-out at 50%:
- Effective leverage: 116,000 ÷ 10,000 = 11.6x
- Margin used: 116,000 ÷ 30 = $3,866.67, leaving $6,133.33 of free margin
- Margin level: 10,000 ÷ 3,866.67 = 258.6%
- Every 1% move in EUR/USD is worth $1,160 to this position
- Margin call: 10,000 ÷ 116,000 − 1.00 ÷ 30 = 0.0862 − 0.0333 = 5.29%, at about 1.0987 (≈ 613 pips)
- Stop-out: 0.0862 − 0.50 ÷ 30 = 6.95%, at about 1.0793 (≈ 807 pips)
- Equity wiped out: 1 ÷ 11.6 = 8.62%, at 1.0600
The broker's 1:30 sets the margin, but the 11.6x effective leverage sets the risk: an 8.6% move against the position erases the account, whatever the broker's maximum.
Effective leverage vs broker leverage
A higher broker leverage does not, on its own, make a trade riskier. It lowers the margin locked up, which raises the free margin and the margin level, so the stop-out sits further away. What makes a trade risky is its size relative to your equity. Two traders holding the same $116,000 position on a $10,000 account carry the same 11.6x effective leverage and gain or lose the same $1,160 per 1% move, whether their broker allows 1:30 or 1:500.
The catch is that high broker leverage makes oversized positions easy to open. A protective stop-loss sized from your risk per trade — see the position size calculator — should close a trade long before the margin level matters. If your stop-loss sits beyond the stop-out price, the broker, not your plan, decides where the trade ends.
| Effective leverage | Adverse move that wipes out the equity |
|---|---|
| 2x | 50% |
| 5x | 20% |
| 10x | 10% |
| 20x | 5% |
| 50x | 2% |
| 100x | 1% |
Common mistakes
- Confusing the two leverages. "I trade at 1:500" says nothing about risk; "my positions are worth 20 times my equity" does.
- Looking at one position at a time. Margin and effective leverage add up across every open trade. Enter the combined value of correlated positions.
- Treating the stop-out price as guaranteed. In fast markets and over weekend gaps, positions close at the next available price, which can be well beyond the stop-out level, and not every broker offers negative balance protection.
- Forgetting that margin moves. Brokers raise requirements around major news and weekends, and margin on pairs quoted in other currencies changes with exchange rates. Keep a buffer of free margin.
For the margin of a specific forex, gold or index position, use the margin calculator; for perpetual futures, the crypto liquidation calculator.