Margin calculator
A margin calculator tells you the deposit a provider will hold against a leveraged position. Margin is not a fee; it is collateral set aside while the trade is open. But the less free money you have left after it, the sooner a losing move can force the position closed.
The formula
Required margin = position value ÷ leverage
Margin level (%) = equity ÷ used margin × 100
Retail leverage in the UK, EU and Australia is capped at 30:1 for major currency pairs and 20:1 for non-major pairs, gold and major indices. In the US, retail forex is limited to 50:1 on majors and 20:1 on others.
Worked example
Prices here are illustrative.
- EUR/USD at 1.0850, 1 lot, 30:1: position value 100,000 × 1.0850 = $108,500. Required margin $108,500 ÷ 30 = $3,616.67.
- USD/JPY, 1 lot, 30:1: the base currency is the dollar, so the position is worth $100,000 and the margin is $100,000 ÷ 30 = $3,333.33.
- Gold at an illustrative $2,000, 1 lot (100 oz), 20:1: position value $200,000, margin $10,000.
How to read the result
The result is the amount locked while the trade is open. What remains is your free margin, which absorbs losses. Providers watch your margin level: equity divided by used margin. For retail CFD clients in the UK and EU, positions must be closed when the margin level falls to 50%, and negative balance protection means the account cannot go below zero.
Take the EUR/USD example with $5,000 in the account. Used margin is $3,616.67 and the margin level starts at about 138%. Close-out at 50% would come when equity falls to about $1,808, a loss of roughly $3,192, which on a $10-per-pip position is a move of about 319 pips. A smaller position, sized with the position size calculator, leaves far more room. Leverage magnifies every move in both directions; see our forex guide for the background.