What margin is
Margin is the deposit your broker sets aside to keep a leveraged position open. It is not a fee — it returns to your free balance when the position closes — but while it is locked you cannot use it for other trades. The margin calculator shows that deposit for any size and leverage, along with the free margin and margin level that remain.
How to use it
- Select the instrument and enter the position size in lots.
- Enter the current price of the instrument; it sets the notional value.
- Choose your account leverage, from 1:1 to 1:1000.
- Enter your account balance to see the free margin, the margin level and the largest position the leverage would technically allow.
For crosses quoted in another currency (EUR/JPY, EUR/GBP…), add the conversion rate so the notional can be expressed in dollars.
The formula
notional value = lots × contract size × price (converted to USD)
required margin = notional value ÷ leverage
free margin = balance − required margin
margin level = equity ÷ used margin × 100%
At the moment of entry, equity equals the balance; afterwards it rises and falls with the floating profit or loss.
Worked example
One standard lot of EUR/USD at 1.1600 controls 100,000 euros, a notional value of $116,000.
- At 1:100, the required margin is 116,000 ÷ 100 = $1,160.
- At 1:30, a common retail cap on major pairs in the EU and UK, it is $3,866.67.
With a $10,000 balance at 1:100, the free margin is $8,840 and the margin level is 10,000 ÷ 1,160 ≈ 862%. The largest position the leverage allows is 10,000 × 100 ÷ 116,000 ≈ 8.62 lots — a size at which a move of about 116 pips against you would wipe out the account. A maximum size is a limit, not a target.
Common mistakes
- Treating leverage as a reason to trade bigger. Leverage changes how much margin is locked, not how much you lose per pip. Risk is set by position size and stop distance — see the position size calculator.
- Ignoring margin call and stop-out levels. Many brokers warn at a 100% margin level and start closing positions at 50% or lower. A high margin level gives you room.
- Using account leverage for every instrument. Gold, indices and crypto are often traded at much lower leverage than major pairs, even on the same account.
- Forgetting the conversion. On USD/JPY the notional is $100,000 per lot whatever the yen price; on EUR/JPY it is 100,000 euros converted to dollars.