Margin is the amount of money required to open a leveraged position. It’s not a fee — it’s a security deposit that your broker holds while the trade is open.
How Margin Works
With 1:100 leverage:
- Position: 1 lot EUR/USD = $100,000
- Margin required: $100,000 / 100 = $1,000
Margin Levels
| Level | Meaning |
|---|---|
| 100%+ | Normal trading |
| 100% | Margin call warning |
| Below 50% | Stop out (positions auto-closed) |
Key Terms
- Used Margin — Collateral for open positions
- Free Margin — Available for new positions
- Margin Level — (Equity / Used Margin) × 100%
Example
- Account: $10,000
- Open 0.5 lot EUR/USD
- Used margin: $542
- Free margin: $9,458
- Margin level: 1,845%
Margin Call & Stop Out
When equity drops too low:
- Margin Call (100%) — Warning to add funds
- Stop Out (50%) — Broker auto-closes positions
Key Points
- Higher leverage = Lower margin requirement
- Margin is released when you close the position
- Always maintain adequate free margin