Margin calculator
This margin calculator shows the deposit a broker sets aside when you open a leveraged position. Margin is not a fee; it is collateral held while the trade is open. But the size of a position relative to your account, not the margin itself, decides how fast you can lose money.
The formula
Required margin = contract value ÷ leverage
For pairs quoted in dollars, the contract value is already in dollars. For pairs where the dollar is the base currency, such as USD/JPY, a standard lot is simply $100,000. For crosses, the calculator asks for the rate that converts the base currency into dollars.
Worked example
Illustrative numbers. You open 0.8 lots of EUR/USD at 1.0900 with 30:1 leverage, the retail limit on major pairs in the UK and EU.
- Contract value: 0.8 × 100,000 × 1.0900 = $87,200.
- Required margin: $87,200 ÷ 30 = $2,906.67.
A 1% move in EUR/USD changes the value of this position by about $872, roughly 30% of the margin. At 0.25 lots the same maths gives a margin of $908.33.
How to read the result
- Free margin is what remains after required margin is set aside. Losses on open trades eat into it.
- Margin level is equity divided by used margin, as a percentage. Brokers issue warnings as it falls, and in the UK and EU they must start closing retail positions once it reaches 50%.
- Leverage caps differ by asset: for UK and EU retail clients, 30:1 on major pairs, 20:1 on other pairs, gold and major indices, 5:1 on individual shares and 2:1 on crypto.
- Maximum leverage is a limit, not a target. Being able to open a large position does not make it sensible.
Pair this tool with the position size calculator: size from risk first, then confirm you have enough margin. For the background on leverage, see how forex trading works.
Sources
- European Securities and Markets Authority, product intervention measures on CFDs
- UK Financial Conduct Authority, rules on CFDs for retail clients