Forex Margin Calculator

Margin is capital reserved, not money at risk

This is the distinction the whole page exists for, and conflating the two is the most expensive beginner error in leveraged trading. Required margin is a deposit your broker ring-fences while a position is open. It is still your money. When you close the trade it returns to your free margin in full, whatever the outcome. It is not a fee, not a cost, and not a loss.

Risk is a different quantity entirely. Risk is what the position loses if price reaches your stop, and it is determined by stop distance multiplied by pip value multiplied by size. Margin is determined by notional value divided by leverage. The two numbers share no inputs at all - which is why they can differ by any multiple in either direction, and why neither one tells you anything about the other.

Work a case through and the independence becomes obvious. One standard lot of EUR/USD at an assumed illustrative price of 1.1000 has a notional value of 110,000 in a dollar account. At 1:100 leverage it ties up 1,100 of margin. With a 25 pip stop it risks 25 x 10 = 250. The margin is 4.4 times the risk. Move the stop to 200 pips and the risk becomes 2,000 while the margin stays at 1,100 - now the risk is nearly double the margin. Same position, same broker, same leverage.

So when you ask what a trade will cost you, be clear which question you mean. How much will be locked up is a margin question. How much can I lose is a stop-loss and position size question. Answering the second with the first is how accounts get destroyed by traders who believed they could only lose their margin.

• Margin: returned on close, regardless of profit or loss. Determined by notional and leverage.
• Risk: gone if the stop is hit. Determined by stop distance, pip value and lot size.
• Margin does not cap your loss. A losing position can consume far more than the margin it reserved.
• Free margin is not a loss budget. It is unreserved equity, most of which you should not be planning to lose.

The formula, and why leverage is just its reciprocal

Required margin starts from notional value: the full face value of the currency you are controlling. One standard lot means 100,000 units of the base currency, so 0.5 lots of GBP/USD is 50,000 pounds. That is what you are actually holding a claim on. Leverage then determines what fraction of it you must post.

Leverage and margin rate are the same statement written two ways. Leverage of 1:100 means one unit of your capital controls one hundred units of notional, so you post one hundredth - a 1 percent margin rate. The margin rate is simply 1 divided by the leverage ratio, and the required margin is notional multiplied by that rate, which is the same as notional divided by the leverage.

The currency detail catches people out. The notional is naturally measured in the base currency, so the margin is first computed in the base currency and then converted into your account currency. For a dollar account trading GBP/USD this means the GBP/USD price enters the calculation - not because price affects margin conceptually, but because it is doing the conversion. The two orderings agree: 50,000 GBP at 1:100 is 500 GBP, which at an assumed 1.2500 is 625 USD, exactly the same as 62,500 USD of notional divided by 100.

Notional (base ccy) = lots x contract size
Margin rate         = 1 / leverage
Required margin     = Notional x Margin rate
                    = Notional / leverage
then converted into your account currency.

Leverage   Margin rate
--------   -----------
 1:30        3.3333%
 1:50        2.0000%
 1:100       1.0000%
 1:200       0.5000%
 1:500       0.2000%

Which of these you can access depends on your
jurisdiction and account type - several regulators
cap retail leverage on major pairs, others do not.
Check the rules that apply to you.

Worked example: the same trade at four leverages

Assumptions: a US dollar account, GBP/USD, 0.5 lots, standard lot = 100,000 units of the base currency, and an assumed illustrative price of GBP/USD = 1.2500 used solely to convert the sterling notional into dollars. The position is identical in all four rows below. Only the leverage changes.

Margin swings by a factor of nearly seventeen across the ladder, from 2,083.33 at 1:30 down to 125.00 at 1:500. That is a large difference in how much of your account is unavailable while the trade runs. It is also, on its own, completely uninformative about how much the trade can lose.

Look at the last column. Pip value on 0.5 lots is 0.0001 x 50,000 = 5.00, so a 30 pip stop costs 150.00 - in every row. The trader at 1:500 and the trader at 1:30 have precisely the same amount at risk. What the higher leverage bought was not more risk and not less; it bought free margin, and therefore the capacity to open other positions or to sit through a deeper adverse excursion before a stop-out. Whether that capacity is useful or dangerous depends entirely on what you do with it.

Notional = 0.5 x 100,000 = 50,000 GBP
         = 50,000 x 1.2500 = 62,500 USD
Pip value = 0.0001 x 50,000 = 5.00 USD per pip

Leverage   Required margin   Risk on a 30 pip stop
--------   ---------------   ---------------------
 1:30        2,083.33 USD          150.00 USD
 1:100         625.00 USD          150.00 USD
 1:200         312.50 USD          150.00 USD
 1:500         125.00 USD          150.00 USD

Margin varies 16.7x. Risk does not vary at all.

Free margin, margin level and the stop-out

Three related figures govern whether your positions stay open. Equity is balance plus the running profit or loss on open trades. Used margin is the total reserved across all open positions. Free margin is equity minus used margin - the unreserved portion, and the buffer that absorbs adverse movement. Margin level is equity divided by used margin, expressed as a percentage, and it is the number brokers act on.

As a position moves against you, equity falls while used margin typically stays put, so the margin level falls. Brokers set two thresholds on it: a margin call level at which you are warned, and a stop-out level at which positions are closed automatically to stop the account going further. Both vary by broker and jurisdiction, so check yours rather than assuming.

The worked case below makes the mechanics concrete. Assumptions: a dollar account with 5,000 equity, one standard lot of EUR/USD at an assumed illustrative price of 1.1000, 1:100 leverage, pip value 10.00, and a broker that fixes required margin at the opening price. Some brokers revalue margin as price moves, which shifts the exact thresholds slightly - the shape of the result is the same.

Two things are worth taking from this. First, a margin level of 454 percent sounds enormously safe, and a 390 pip cushion genuinely is a long way on EUR/USD - but it exists only because just one position is open. Add positions and used margin rises while equity does not, so the level falls before the market has done anything. Second, a stop-out is not a stop-loss. It is a liquidation triggered by account arithmetic, at whatever price is available, in whatever order the broker chooses. It is what happens when risk control has already failed.

Used margin   = 110,000 / 100        = 1,100.00 USD
Free margin   = 5,000 - 1,100        = 3,900.00 USD
Margin level  = 5,000 / 1,100        = 454.55%

After a 200 pip adverse move:
  Loss        = 200 x 10.00          = 2,000.00 USD
  Equity      = 5,000 - 2,000        = 3,000.00 USD
  Margin level= 3,000 / 1,100        = 272.73%

To reach a 100% margin level:
  Equity must fall to used margin    = 1,100.00 USD
  Required loss = 5,000 - 1,100      = 3,900.00 USD
  In pips       = 3,900 / 10.00      = 390 pips

Why high leverage is really a position-size temptation

High leverage does not make a trade more dangerous. It makes a dangerous trade possible. That is a subtle difference and it is the whole argument in one line: leverage sets the ceiling on the size you may open, and size is what determines the damage.

Consider a 2,000 dollar account at 1:500 leverage. One standard lot of EUR/USD at an assumed price of 1.1000 requires 110,000 / 500 = 220 in margin. So the account can afford 2,000 / 220 = 9.09 lots. Open nine lots, using 1,980 of margin, and you are technically within the rules. You are also holding a position worth around 990,000 in notional value on 2,000 of capital, at 90.00 per pip. Total equity is exhausted after roughly 2,000 / 90 = 22 pips of adverse movement - less than a routine morning's range on a major pair. In practice the stop-out fires before that, closing the position at a loss chosen by the broker rather than by you.

Nothing in that outcome was caused by leverage as such. It was caused by opening nine lots on a 2,000 account. The same nine lots at 1:30 leverage would simply have been rejected for insufficient margin - 990,000 / 30 is 33,000, far beyond the account - which is precisely the argument regulators make for capping retail leverage. The cap does not reduce the risk of any given position; it removes the option of taking positions the account cannot survive.

The practical discipline follows directly. Decide lot size from your risk plan first, using the position size calculator, and only then check what margin that size requires. Margin should be a constraint you verify, never an input that suggests a size. If the size your risk plan produces is comfortably within your free margin, leverage is irrelevant to the trade. If it is not, the size is too big - regardless of what the broker will permit.

Non-USD accounts and pairs where the dollar is the base

Because margin is computed on the base-currency notional, a fact emerges that surprises most people: for a pair where the US dollar is the base currency, the pair's price does not enter the margin calculation at all. One standard lot of USD/JPY is 100,000 dollars of notional whether the rate is 130 or 160. Divide by the leverage and the margin is a fixed dollar amount. The yen price is irrelevant to margin, even though it is central to pip value - which is one more reason the two numbers should never be blurred together.

Compare that with EUR/USD in a dollar account, where the notional is 100,000 euros and must be converted, so the EUR/USD price does move the margin figure. And with GBP/USD, where the same conversion applies via the sterling price. The rule is consistent: the notional is fixed in the base currency, and any price that appears in the calculation is doing currency conversion, not measuring risk.

For an account funded in something other than dollars, one more conversion is layered on. The example below assumes a euro-denominated account, one standard lot of USD/JPY, 1:100 leverage, and an assumed illustrative EUR/USD rate of 1.2500 for the conversion. Note that USD/JPY itself never appears.

Across multiple positions, used margin is simply additive - each open trade reserves its own and the total is what your margin level is measured against. Some brokers offer reduced or netted margin for hedged positions in the same instrument, but the treatment varies and should be confirmed rather than assumed.

Notional (base ccy) = 1.0 x 100,000  = 100,000 USD
Margin in USD       = 100,000 / 100  =   1,000 USD

assumed illustrative rate: EUR/USD = 1.2500
Margin in EUR       = 1,000 / 1.2500 =     800 EUR

The USD/JPY price never enters this calculation.
It sets pip value, not margin.

Edge cases that change the margin number

The formula is stable but the inputs are not always what you expect, and several standard broker practices move the required margin after you have opened a position. None of these are unusual; all of them have caught out traders who assumed margin was fixed at entry.

The most consequential of these is the leverage change around scheduled events. If margin requirements rise while your positions are open, used margin increases, free margin falls and your margin level drops - without price having moved a single pip. An account running at high margin utilisation can be pushed toward a stop-out by an administrative change alone. Keeping utilisation modest is what makes that scenario a non-event rather than a crisis.

Use this calculator to confirm that a position sized by your risk plan sits well within free margin, size the trade itself with the position size calculator, price the stop with the pip value calculator, and compare leverage caps and margin policies across the broker comparison before funding an account. FXMARE is an information site, not a broker - the figures here are illustrative and your broker's own terms govern.

• Tiered margin: many brokers reduce effective leverage as position size grows, so a large trade may need more margin than a straight division suggests.
• Pre-event and weekend increases: margin requirements are commonly raised ahead of elections, central bank decisions and market closures.
• Instrument differences: exotics, indices, commodities and crypto CFDs usually carry higher margin rates than major forex pairs.
• Revaluation: some brokers hold margin fixed at the open price, others recompute it as the market moves. This changes exactly where a stop-out falls.
• Hedged positions: netting or reduced margin on offsetting trades in the same instrument is broker-specific, not a market rule.
• Negative balance protection: available to retail clients in some jurisdictions and not others. Where it is absent, losses can in principle exceed the account balance.