Margin is the collateral your broker holds to keep a leveraged position open. This page shows how to calculate the margin required for any trade and why leverage cuts both ways.
What is margin?
Margin is the deposit you put up to open a leveraged position. It's not a fee — the broker holds it while the trade is open and returns it (minus losses) when you close. Required margin = the part of your account you can't use elsewhere while the position runs.
Why margin matters
Knowing required margin before entering tells you whether your account can support the trade, and how much "free margin" remains for other positions and to absorb drawdowns. Running out of free margin triggers a margin call — the broker closes your trades.
The margin formula
Worked example
Notional = 1 × 100,000 × 1.10 = $110,000
Margin = $110,000 ÷ 100 = $1,100
So $1,100 of your $10,000 account is locked up for this trade.
Leverage amplifies both ways
At 1:100, a 1% move against your full notional costs 100% of your margin. Leverage magnifies profit and loss equally. Position sizing — not leverage — is what makes a strategy survivable.
Margin call and free margin
- Free margin = equity − used margin. It's your buffer for open trades.
- Margin level = equity ÷ used margin. Below a broker threshold (often 100%), margin calls close positions.
- Stop-losses protect margin by limiting losses before free margin is exhausted.