Master margin requirements and leverage to trade safely. Learn how to avoid margin calls and protect your trading capital from forced liquidation.
Margin is the deposit required by your broker to open a leveraged position. It's not a fee or cost—it's collateral that gets "locked up" while your trade is open. Understanding margin requirements is crucial because insufficient margin leads to margin calls and potentially devastating forced liquidations.
Margin calls and forced liquidations are among the top reasons traders lose money. Many traders focus on entry strategies but ignore margin management—a costly mistake that can wipe out accounts.
Required Margin = (Trade Size × Exchange Rate) / Leverage
Pair: EUR/USD at 1.1000
Trade Size: 100,000 units (1 lot)
Leverage: 50:1
Account Currency: USD
Margin = (100,000 × 1.1000) / 50 = $2,200
Pair: EUR/USD at 1.1000
Trade Size: 100,000 units (1 lot)
Leverage: 500:1
Account Currency: USD
Margin = (100,000 × 1.1000) / 500 = $220
| Leverage | Margin Required | EUR/USD Example | Risk Level |
|---|---|---|---|
| 10:1 | 10% | $11,000 | Very Low |
| 30:1 | 3.33% | $3,667 | Low |
| 100:1 | 1% | $1,100 | Moderate |
| 200:1 | 0.5% | $550 | High |
| 500:1 | 0.2% | $220 | Very High |
Higher leverage = lower margin requirement = more buying power. But it also means higher risk. A 1% move against you with 100:1 leverage wipes out your entire margin. With 500:1 leverage, a 0.2% move can trigger a margin call.
Account Balance: $1,000
Trade: 1 lot EUR/USD at 1.1000 with 100:1 leverage
Required Margin: $1,100
Free Margin: $1,000 - $1,100 = -$100 (Insufficient!)
Result: Trade Rejected
You cannot open this position because you don't have enough margin.
Account Balance: $5,000
Trade: 1 lot EUR/USD at 1.1000 with 100:1 leverage
Required Margin: $1,100
Initial Free Margin: $3,900
Market moves against you: -300 pips ($3,000 loss)
New Account Equity: $2,000
Margin Level: $2,000 / $1,100 = 182%
Result: Approaching Danger Zone
Most brokers start margin calls at 100% margin level and force liquidation at 50%.
Keep at least 50% of your account as free margin. This provides a buffer against adverse price movements.
Keep your margin level above 200%. This ensures you have enough buffer to withstand normal market volatility.
Professional traders often use 10:1 to 50:1 leverage, not the maximum available. Lower leverage = higher margin requirement = safer trading.
Don't guess your margin requirements. Our calculator shows you exactly how much margin you need for any trade size and leverage combination. Check before you trade, not after.
Calculate Margin RequirementsUsing 500:1 leverage because it's available. High leverage amplifies both profits AND losses exponentially.
Opening trades without checking free margin. Always ensure you have sufficient buffer for market volatility.
Opening multiple EUR/USD, GBP/USD, and AUD/USD positions. When USD moves, all positions move against you simultaneously.
Account Size: $10,000
Maximum Risk per Trade: 2% ($200)
Leverage Used: 50:1 (conservative)
Margin per Standard Lot: ~$2,200
Maximum Positions: 2-3 lots maximum
Free Margin Maintained: $5,000+ (50%)
Result: Safe, Sustainable Trading
This approach ensures you can weather market storms without margin calls.
Proper margin management is the difference between long-term trading success and account blow-ups. Combined with position sizing and risk management, it forms the foundation of professional trading.
Always check your margin requirements before opening positions. Our calculator handles all currency pairs and leverage ratios.
Margin Calculator →Combine margin management with proper position sizing to create a robust risk management system.
Position Sizing Guide →Download this guide as PDF for offline review and reference.
