What is Margin?
Margin is the amount of capital required to open and maintain a leveraged trading position. Instead of paying the full value of a trade, you only need to deposit a fraction of it, while the rest is borrowed through leverage.
This margin calculator helps you determine required margin, position value, and free margin based on leverage and trade size.
How Margin Works
Leverage allows you to control a larger position with a smaller amount of capital. For example, with 10x leverage, a $1,000 balance can control a $10,000 position.
Higher leverage reduces required margin, but it also increases risk. If your margin falls below the required level, your position may be liquidated.
Margin Formula
The basic formulas are:
Position Size = Margin × Leverage
Free Margin = Account Balance − Used Margin
Understanding these formulas helps you plan trades more effectively and avoid overexposure.
Why Margin Matters
Margin determines how much capital is locked in a trade and how much room you have left for new positions or drawdown. Without understanding margin, traders often take excessive risk without realizing it.
- Control larger positions with less capital
- Improve capital efficiency
- Understand liquidation risk
- Avoid overleveraging
- Manage trading risk more precisely
How to Use This Calculator
- Enter your position value
- Enter the leverage you are using
- Optionally enter your account balance and maintenance margin
- Click calculate to see required margin and risk context
Frequently Asked Questions
Margin is the amount of money required to open a leveraged position. It acts as collateral while you control a larger trade size.
Higher leverage reduces the margin required to open a trade. For example, with 20x leverage you only need 5% of the total position value as margin.
Free margin is the available balance that is not being used for open positions. It acts as a buffer against losses and allows you to open new trades.
If your margin drops below the required level, your position may be liquidated automatically. This is called a margin call or forced liquidation.
Not necessarily. While higher leverage increases potential profits, it also increases losses and liquidation risk. Most professional traders use moderate leverage.
You can reduce risk by using lower leverage, setting stop losses, managing position size, and keeping sufficient free margin in your account.