Forex Margin Calculator

What Is Margin in Forex Trading?

When you open a leveraged forex position, your broker sets aside a portion of your account balance as collateral. This reserved amount is called margin. It is not a transaction cost or a fee — it is capital held temporarily to secure your open trade against potential losses.

Think of it as a good-faith deposit. The broker holds it for the duration of your trade. Once you close the position (profit or loss), the margin is released back to your available account balance.

The Margin Formula Explained

The standard formula for required margin is:

Required Margin = (Position Size in Base Currency × Open Price) / Leverage

For example: 1 standard lot of EUR/USD (100,000 EUR) at a price of 1.0850, with 1:100 leverage:

(100,000 × 1.0850) / 100 = $1,085 required margin

For cross pairs where neither currency is USD (e.g., EUR/GBP), an additional conversion step is needed to express the margin in your account currency.

Required Margin, Free Margin, and Margin Level

These three concepts form the foundation of account health management:

• Required Margin — the amount your broker locks up to keep the position open. This number increases linearly with position size and decreases with higher leverage.
• Free Margin — the portion of your account balance not currently reserved. Free Margin = Account Balance − Used Margin. This is the capital available to open additional positions or absorb floating losses.
• Margin Level — expressed as a percentage: (Equity / Used Margin) × 100. This is the single most important health indicator for a leveraged account.

Margin Level Thresholds

Note: Exact margin call and stop-out levels vary by broker. Always check your broker's specific policy before trading.

How Leverage Affects Your Margin

Leverage and required margin have an inverse relationship. Higher leverage means lower margin requirements — and proportionally higher risk exposure per unit of capital.

• 1:10 leverage — 10% margin rate. $10,000 controls $100,000 in notional value.
• 1:100 leverage — 1% margin rate. $1,000 controls $100,000 in notional value.
• 1:500 leverage — 0.2% margin rate. $200 controls $100,000 in notional value.

High leverage amplifies both profits and losses at exactly the same rate. A 1% adverse move on a 1:100 leveraged position wipes out your entire margin. Risk management — not leverage maximization — is what separates consistent traders from the majority who fail.

Frequently Asked Questions

What is the difference between margin and leverage?

Leverage is the ratio between your margin and the notional position value it controls. Margin is the actual cash amount required. With 1:100 leverage, a $1,000 margin controls a $100,000 position. Margin is expressed in currency units; leverage is expressed as a ratio.

What is a margin call?

A margin call is a notification from your broker that your account equity has fallen below the required margin threshold, typically when margin level drops below 100%. Once a margin call is triggered, you cannot open new positions until you deposit more funds or close existing ones.

How do I avoid a margin call?

Keep your margin level above 200% at all times. Use appropriate position sizing (risk no more than 1–2% of your account per trade), set stop-losses on every position, and avoid over-leveraging. The margin calculator above shows your margin level in real time so you can plan before you trade.

Does margin requirement change when the exchange rate changes?

Yes. For cross pairs, margin is calculated using the current market price, which affects the notional value of the position. As the exchange rate moves, the required margin also shifts slightly. For USD-based pairs (EUR/USD, GBP/USD), the effect is minimal, but for exotic pairs with volatile crosses, margin requirements can change meaningfully during a trading session.