Margin

Basics

Margin is the amount of your own money a broker sets aside to keep a leveraged position open, calculated as the position value divided by your leverage.

Key facts

FormulaPosition value ÷ leverage

NotThe most you can lose

Frees up whenYou close the position

RelatedLeverage, position sizing

What margin is and is not

Margin is a deposit, not a cost and not your maximum loss. It is the slice of your account the broker holds while a leveraged trade is open, and it comes back the moment you close. One standard lot of EURUSD is about 110,000 dollars of position, so at 1:100 leverage the margin held is roughly 1,100 dollars, freed again on exit.

Margin and leverage are one thing

Margin and leverage are two views of the same relationship: higher leverage means less margin per position and more room to open size. That is convenient, but the same headroom makes it easy to carry more exposure than the account can really handle. A margin calculator shows both the deposit a trade ties up and the effective leverage you are running.

Related terms

Leverage Position sizing Pip

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