Margin Calculator
Calculate the required margin for your forex and CFD trades. Understand how leverage affects your margin requirements and manage your trading capital effectively.
Calculate Your Margin
Margin Level Risk Indicator
Low RiskYour margin level is well above 200%, giving you comfortable room to absorb market movements without risk of a margin call.
Formula Breakdown
The margin calculator uses a straightforward formula to determine how much capital your broker requires to open a position. Here's the step-by-step breakdown using your current inputs:
💡 Your Calculation
Key Terms in the Formula
- Lot Size — The number of standard lots you're trading. 1 standard lot = 100,000 units of the base currency.
- Contract Size — The number of units per lot (typically 100,000 for forex, but varies for metals and commodities).
- Price — The current market price of the currency pair.
- Leverage — The ratio provided by your broker that amplifies your trading power. 1:30 means for every £1 of margin, you control £30 in the market.
Leverage Comparison Table
See how different leverage levels affect your margin requirements for the same trade. The table below shows the required margin for your current currency pair and lot size across all available leverage options.
| Leverage | Margin % | Required Margin | Free Margin | Margin Level |
|---|
⚠️ Higher Leverage = Higher Risk
While higher leverage reduces your margin requirement and frees up capital, it also magnifies your potential losses. A small adverse price movement can result in significant losses relative to your account balance. EU-regulated brokers cap retail leverage at 1:30 for major currency pairs to protect consumers.
Understanding Margin & Leverage
What is Margin?
Margin is the collateral deposit required by your broker to open and maintain a leveraged trading position. It is not a transaction fee — it is your own capital set aside as a good-faith deposit. When the trade is closed, the margin is returned to your available balance (minus any losses).
What is Leverage?
Leverage is the multiplier that allows you to control a larger position with a smaller amount of capital. For example, 1:100 leverage lets you control £100,000 worth of currency with just £1,000 in margin. It amplifies both profits and losses equally.
Margin Call
A margin call occurs when your margin level drops below a threshold set by your broker (typically 100%). This is a warning that your equity has fallen too low relative to your open positions. You will need to deposit more funds or close positions to bring your margin level back up.
Stop-Out Level
The stop-out level is the point at which your broker automatically closes your positions to prevent further losses. This typically occurs when your margin level falls to 20–50%. Your most unprofitable positions are closed first. EU regulations mandate a stop-out level of no lower than 50%.
✅ Key Takeaway
Always maintain a margin level well above 200% to give yourself a comfortable buffer against market volatility. Professional traders often aim for 500% or higher to ensure they never face a margin call, even during periods of high market turbulence.
Frequently Asked Questions
❓ What is margin in forex trading?
Margin is the amount of money a trader must deposit with their broker to open and maintain a leveraged position. It acts as collateral or a good-faith deposit, not a fee. For example, with 1:100 leverage, you only need to put up 1% of the total trade value as margin.
❓ How do I calculate required margin?
Required margin is calculated using the formula: Required Margin = (Lot Size × Contract Size × Current Price) ÷ Leverage. For example, trading 1 standard lot (100,000 units) of EUR/USD at 1.1000 with 1:100 leverage requires $1,100 in margin.
❓ What is a margin call?
A margin call occurs when your account equity falls below the required margin level, typically when your margin level drops below 100%. Your broker will notify you to either deposit more funds or close some positions to reduce your margin requirements.
❓ What is the difference between margin and leverage?
Leverage is the ratio of the trade size to the margin required. Margin is the actual amount of money you need to deposit. For example, 1:100 leverage means you need 1% margin. They are two sides of the same coin — higher leverage means lower margin requirements, but also higher risk.
❓ What happens at a stop-out level?
A stop-out occurs when your margin level falls below the broker's stop-out threshold, typically 20–50%. At this point, the broker will automatically begin closing your most unprofitable positions to prevent your account from going into negative balance.
❓ How does leverage affect margin requirements?
Higher leverage reduces the margin required to open a position. With 1:30 leverage, you need 3.33% of the trade value as margin. With 1:500 leverage, you need only 0.20%. However, while higher leverage frees up capital, it also amplifies both potential profits and losses.
Related Tools & Resources
Use our other free trading tools and educational resources to build a complete understanding of trade mechanics and risk management.
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