Free Margin

Free margin is the amount of margin available after subtracting the used margin. You can use free margin to open more positions.

Margin is essential to trading with leverage as it’s effectively the collateral provided to your broker to open positions. How much margin is required depends on how much leverage your broker offers.

Example: With 1:10 leverage, you need to provide a 10% margin while the provide essentially loans the remaining 90%. Suppose you’re opening a position for 10,000 GBP/JPY. In that case, the used margin would be £1,000.

Free margin is the amount of margin that you can use for new or additional positions. Many traders think that margin is simply the amount of money deposited in their trading account; that’s only true if your account is flat, meaning you don’t have any positions open. If you have a position, the free margin dynamically adjusts according to unrealised profit and loss.

Calculation: equity – used margin = free margin