Margin is a deposit, not a fee
When you open a leveraged position, the broker sets aside part of your balance as collateral for it. That is margin. It is not taken from you — it is locked while the position is open and released the moment it closes.
How it is calculated
required margin = volume × contract size × price ÷ leverage
For 0.10 lots of EURUSD at 1.0850 with 1:500 leverage: 10,000 × 1.0850 ÷ 500 = 21.70 USD.
The three numbers on your platform
- Balance — the money in the account, ignoring open positions.
- Equity — balance plus the floating profit or loss of open positions. This is what you actually have right now.
- Free margin — equity minus the margin locked in open positions. This is what you can still open new positions with, and what absorbs losses.
Margin level, margin call and stop out
margin level % = equity ÷ used margin × 100
As a position moves against you, equity falls, and so does the margin level. Two thresholds matter:
- 1.Margin call — a warning that your margin level has dropped below the broker's first threshold. Deposit funds or reduce positions.
- 2.Stop out — at the second threshold the platform starts closing your positions automatically, largest loss first, until the level recovers. It exists to stop the account going negative, but it will close trades you wanted to keep.
Why free margin matters
A common beginner mistake is to use most of the free margin opening positions, leaving nothing to absorb a normal move. A trade that would have been fine with room to breathe gets stopped out on noise. Keep free margin high; it is your buffer, not spare money.
Summary
Margin is collateral locked per position. Equity minus used margin is your free margin, and when it runs low the platform closes positions for you. Watch margin level, not balance.