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SECTION 7

What Is Margin?

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Margin, also referred to as used margin, is the amount of funds set aside to maintain open positions. When a trade is opened, this margin is reserved and remains locked until the position is closed.

Margin depends on the instrument, position size, and leverage level applied.

Margin is calculated by dividing trade size by leverage, then converting using the exchange rate.

SECTION 7

Margin and Leverage

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Higher leverage reduces margin requirements, while lower leverage requires more capital.

With leverage of 1:30, the margin required for a €100,000 trade is €3,333.33.

Converted to USD at EUR/USD 1.11413, margin equals $3,713.77.

SECTION 7

Margin for Other Asset Classes

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Margin for other assets depends on fixed leverage limits and market price.

One lot of gold (100 oz) at $1,511.73 with 1:20 leverage requires $7,558.65 margin.

SECTION 7

Free Margin

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Free margin is the amount of funds available for new trades or withdrawal.

It is calculated as equity minus used margin.

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Equity

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Equity is your account balance plus or minus unrealised profit or loss.

Equity fluctuates while positions are open and equals balance when no trades exist.

SECTION 7

Margin Level

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Margin level is equity divided by used margin, expressed as a percentage.

At 100% margin level, no new trades can be opened.

SECTION 7

Stop Out

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A stop out occurs when equity falls below a predefined percentage of used margin.

If stop out is 50% and margin is €1,000, positions close at €500 equity.

SECTION 7

Margin Summary

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Margin, free margin, equity, margin level, and stop out are core concepts every trader must understand.