What is margin in forex? Margin is the collateral a broker requires to open a leveraged trade. Required margin equals the lot size times the contract size times the exchange rate, divided by the leverage ratio. For example, trading 1 standard lot of EUR/USD at 1:100 leverage requires approximately $1,085 of margin. A margin call happens when your equity falls below the required margin for open positions.
Margin Calculator
Calculate the exact margin required for any forex trade. Choose your pair, lot size, and leverage to see how much collateral you need before entering a position.
Margin Calculator
Calculate required margin for any position
Enter your balance to see free margin and margin level.
Required Margin
$1,085.00
to open 1.00 lot of EUR/USD at 1:100 leverage
Notional Trade Value
$108,500.00
Margin Ratio
1.00%
of trade value
Formula
Required Margin = (Lot Size × Contract Size × Exchange Rate) / Leverage
1.00 × 100,000 × 1.0850 / 100 = $1,085.00
How It Works
Select Pair & Leverage
Choose from 20+ currency pairs and pick your leverage ratio from 1:10 to 1:500.
Set Position Size
Enter your lot size or tap a preset for micro (0.01), mini (0.10), or standard (1.00) lots.
Read Your Margin
See the required margin, notional value, margin ratio, and margin level instantly.
Understanding Margin & Leverage
What Is Margin?
Margin is the collateral your broker holds while you maintain an open leveraged position. It is not a transaction fee or a cost of trading — think of it as a security deposit. The required margin is a fraction of the full position value, determined by the leverage your account uses. Once the trade is closed, the margin is released back to your available balance.
How Does Leverage Work?
Leverage allows you to control a larger position with a smaller amount of capital. At 1:100 leverage, you can control $100,000 worth of currency with just $1,000. The higher the leverage, the less margin you need — but both your profits and your losses are amplified proportionally. For example, with 1:500 leverage you only need 0.2% of the trade value as margin, but a 0.2% move against you would wipe out your entire margin deposit.
The Margin Formula
Required Margin = (Lots × Contract Size × Exchange Rate) / Leverage
For a standard lot (100,000 units) of EUR/USD at a rate of 1.0850 with 1:100 leverage: (1 × 100,000 × 1.0850) / 100 = $1,085.00. If you switched to 1:500 leverage, the same trade would only require $217.00 of margin.
Margin Calls & Stop-Outs
When your account equity drops below the required margin, you enter margin call territory. Most brokers define this as a margin level below 100%. If your equity continues to fall to the stop-out level (commonly 20–50%), the broker will begin automatically closing positions to protect both you and themselves from further loss. Monitoring your margin level and using appropriate leverage are critical parts of risk management.
Frequently Asked Questions
- What is margin in forex trading?
- Margin is the amount of money your broker requires you to deposit as collateral when you open a leveraged position. It is not a fee — it is a portion of your account equity that is set aside and released when the trade is closed. The higher your leverage, the less margin is required per trade.
- What is leverage in forex?
- Leverage is the ratio between the total value of your trade (notional value) and the margin required to open it. With 1:100 leverage, a $100,000 position requires just $1,000 of margin. Leverage magnifies both profits and losses — a 1% move in your favor doubles your margin, but a 1% move against you wipes it out.
- How is required margin calculated?
- Required Margin = (Lot Size x Contract Size x Exchange Rate) / Leverage. For example, 1 standard lot of EUR/USD at 1.0850 with 1:100 leverage: (1 x 100,000 x 1.0850) / 100 = $1,085.00. This calculator converts the result into your selected account currency automatically.
- What is a margin call?
- A margin call occurs when your account equity falls below the required margin for all open positions, typically when margin level drops below 100%. Your broker may require you to deposit additional funds or will begin closing positions automatically at the stop-out level (usually 20-50%) to prevent further losses.
- What is the difference between used margin and free margin?
- Used margin is the total collateral currently locked by your open positions. Free margin is your account equity minus used margin — it is the amount available to open new positions or absorb floating losses. When free margin drops to zero, you cannot open new trades and are at risk of a margin call.
- What is margin level and why does it matter?
- Margin level is (Equity / Used Margin) x 100, expressed as a percentage. A margin level of 500% means your equity is 5 times your used margin — a comfortable cushion. Most brokers issue a margin call at 100% and begin forced liquidation (stop-out) at 20-50%. Monitoring margin level helps you gauge how close you are to a forced close.
- What leverage should beginners use?
- Beginners should use low leverage — 1:10 or 1:20 at most. While higher leverage allows larger positions, it also means small adverse moves can wipe out your account quickly. Many regulators cap leverage for retail traders (e.g. 1:30 in the EU, 1:50 in the US). Start low and only increase leverage as you develop consistent risk management habits.
- How does margin work for multiple open positions?
- Each open position uses its own margin based on lot size, leverage, and exchange rate. Your total used margin is the sum of margin for all open positions. If you have 3 positions each requiring $500, your total used margin is $1,500. Free margin decreases with each new position, reducing your buffer against adverse price moves.
Size Your Trades with Confidence
Now that you understand your margin requirements, pair that knowledge with verified trading signals from professionals with tracked performance. Make informed entries, size positions properly, and manage risk like a pro.
Get Better at Trading
Free weekly trading insights, a structured execution checklist, and tips from verified providers. No spam — unsubscribe anytime.
Join 2,000+ traders · Free forever · No credit card