Leverage & Margin Calculator

Margin calculator

Required margin

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Glass euro symbol and a glass dollar symbol balanced on a sleek scale

The margin calculator works out the deposit, or required margin, a broker holds while your position is open. Pick a pair, enter the price, your size in lots and the leverage available to you. For crosses, add the rate that converts the base currency into US dollars.

The formula

Exposure in USD = lots × lot size × dollar price of the base currency
Margin = exposure ÷ leverage ratio

For EUR/USD the base currency is the euro, so its dollar value is the pair's price. For USD/JPY the base is the dollar itself, so the position value is simply the number of units. Gold uses 100 ounces per lot.

Worked examples (illustrative figures)

EUR/USD at 1.0850, 0.5 lots, 30:1: 0.5 × 100,000 × 1.0850 = $54,250 position value. Margin = $54,250 ÷ 30 ≈ $1,808.33.

Gold at $2,300, 0.1 lots, 20:1: 0.1 × 100 oz × $2,300 = $23,000. Margin = $23,000 ÷ 20 = $1,150.

Reading the margin calculator result

Margin is not a fee and not the maximum you can lose. It is the portion of your balance set aside as collateral. Your profit or loss depends on the position value, so on the EUR/USD example a 1% move is worth about $542, whatever leverage you used. What leverage changes is how much free balance remains to absorb losses before a margin call.

For UK and EU retail clients, brokers must start closing positions when equity falls to 50% of the required margin. Retail leverage there is capped at 30:1 for major currency pairs, 20:1 for other pairs, gold and major indices, 10:1 for other commodities and minor indices, 5:1 for individual shares and 2:1 for crypto. US retail forex is capped at 50:1 on majors.

Using the maximum leverage available leaves very little room before positions are closed. Leveraged trading carries a high risk of rapid loss.

Free margin and margin level

Your platform will show equity (balance plus or minus open profit and loss), used margin and free margin. The margin level is equity divided by used margin, as a percentage. On the EUR/USD example, a $5,000 account holding that position has a margin level of about 276% before any price move; losses reduce equity and so push the level down toward the close-out point.

Size the trade first with the position size calculator, then use this page to check the margin fits. Background is in how forex trading works.

Sources

UK Financial Conduct Authority, CFD rules for retail clients
European Securities and Markets Authority, CFD product intervention measures