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How margin and leverage work
Margin is the deposit your broker holds to keep a leveraged position open. Leverage is the ratio that decides how small that deposit is relative to the position it controls. They are two sides of the same coin: the more leverage you use, the less margin each trade locks up - and the easier it becomes to open more exposure than your account can really carry.
required margin = position value / leverage
Worked example: EURUSD
One standard lot of EURUSD at 1.10 is 100,000 x 1.10 = $110,000 of position value. At 1:100 leverage the margin is 110,000 / 100 = $1,100. Drop to 1:30 and the same trade needs $3,667; push to 1:500 and it needs just $220. The exposure never changed - only the deposit the broker asks for did.
Effective leverage is the number that matters
Your broker cap is a permission, not a measurement. What actually describes your risk is effective leverage: total position value divided by your account equity. Controlling $110,000 on a $10,000 account is 11x effective leverage, whatever the account cap permits. Enter your equity above and the calculator shows it, so you can see when a position has quietly outgrown the account behind it.
Every market, one formula
Gold, indices, futures and crypto all price margin the same way - position value over leverage - they just have different contract sizes. The calculator carries those specs, converts the position value into your account currency at the latest rate, and lets you override any rate it could not load, so the margin figure holds up whatever you trade.
FAQ
How is required margin calculated?
Required margin = position value divided by leverage. Position value is your size times the contract size times the current price, converted to your account currency. So one standard EURUSD lot at 1.10 is $110,000 of exposure, and at 1:100 leverage that ties up $1,100 of margin.
What is the difference between margin and leverage?
Leverage is the ratio you are allowed to trade at - 1:100 means you can control $100 of position per $1 of margin. Margin is the actual money set aside to open the trade. Higher leverage means less margin locked per position, and more room to over-expose an account.
What is effective leverage?
Effective leverage is how much market exposure you are actually carrying relative to your account equity, regardless of the broker cap. Control $110,000 on a $10,000 account and your effective leverage is 11x - even if your account 'allows' 1:100. It is the number that really measures risk, so enter your equity to see it.
Does higher leverage increase my risk?
Leverage itself does not decide your risk - your position size and stop do. What leverage changes is how much margin is locked and how large a position you are able to open. The danger is using the extra headroom to over-size; the same discipline that sets your stop should set your size.
How much margin do I need for gold or an index?
The same formula applies to every market: position value divided by leverage. The calculator carries the contract size for gold, indices, futures and crypto, so you can price the margin on a gold lot or an S&P 500 contract the same way you would a forex pair.
Do I need a TradeDNA account to use this?
No. Every tool here is standalone and free - no signup, no limits. A TradeDNA account is for what comes after: tracking the leverage you actually run trade by trade, and flagging when a position outgrows your plan.