Margin calculator
How much margin a position ties up, how much exposure it actually creates, and what a 1% move against you costs relative to the margin posted. The last number is the one that explains what leverage does — and it is the one most margin calculators leave out.
Margin required for 1 lot of EUR/USD at 1:100
$1,080.00
10.8% of your balance, leaving $8,920 free.
Notional exposure
$108,000
10.8x your balance
Free margin
$8,920
balance minus margin
Loss on a 1% adverse move
$1,080
100% of posted margin
What leverage does and does not change
Leverage changes the margin you post, not the money you lose. At any leverage, a 1% move against 1 lot of EUR/USD costs the same $1,080 — but at 1:100 that is 100% of the margin you had to put up. Higher leverage lets you open a position you could not otherwise afford; it does not make that position safer.
The number that determines your risk is position size, not leverage. Size the trade from your stop instead.
Margin is a deposit, not a cost
Margin is collateral. It is not spent, and it returns to your balance when the position closes — the only money that leaves is the loss, if there is one. This matters because traders routinely treat margin as the size of their bet. It is not. Notional exposure is the size of the bet; margin is what the broker holds while you carry it.
One standard lot of EUR/USD is $108,000 of exposure at a price of 1.08. At 1:500 leverage that costs $216 in margin, which on a $10,000 account feels almost free. It is not almost free — a 1% move against that position is $1,080, more than ten percent of the account, from a trade whose margin requirement suggested it was trivial.
The order of operations that keeps accounts alive
Decide risk first, size second, check margin last. Most blown accounts run that sequence backwards: they check what margin allows, open something near that limit, and discover the risk afterwards. If you size from your stop on the position size calculator and then come here, margin becomes a feasibility check rather than a decision — which is the only job it should ever have.
Questions
- How is forex margin calculated?
- Margin equals notional exposure divided by leverage. Notional is contract size x lots x price, converted to your account currency. One standard lot of EUR/USD at 1.08 is $108,000 of exposure; at 1:100 leverage that requires $1,080 of margin. Note that notional for USD/JPY is price-independent at $100,000 per lot, because the base currency there is already the dollar.
- Does higher leverage mean higher risk?
- Not directly, and the confusion is expensive. Leverage sets the margin you post to open a position — it does not change what a price move costs you. One lot of EUR/USD loses $10 per pip whether your leverage is 1:30 or 1:500. What high leverage does is remove the balance constraint that would otherwise stop you opening an oversized position. The risk comes from the size you choose, not the leverage that permits it.
- What is free margin and why does it matter?
- Free margin is your balance minus the margin currently posted, and it is the buffer absorbing open losses. When it runs out you receive a margin call, and beyond that the broker closes positions for you at whatever price is available. Traders who size by "what margin allows" rather than by stop distance run thin free margin as a matter of course, which is why an ordinary drawdown becomes a forced liquidation.
- What leverage should I use?
- The lowest that lets you open the position your risk calculation says you should take. If sizing from a stop loss gives 0.4 lots, any leverage that permits 0.4 lots is sufficient and the rest is unused headroom. Choosing 1:500 over 1:100 changes nothing about a correctly sized trade — it only widens the range of incorrectly sized ones available to you.