Margin
Margin is the capital reserved by the broker as collateral when a leveraged position opens.
It is held against potential adverse movement, not consumed as a fee. At 1:100 leverage, margin equals 1% of the position notional. Margin is returned to free capital when the position closes.
This page covers the mechanic; it is not trading advice.
Margin held against a real position
Opening a 1 standard lot EUR/USD position at 1.0850 on a 1:100 leverage account holds approximately $1,085 in margin. That capital is reserved — not spent — and is fully released when the position closes, regardless of whether the trade was profitable or loss-making.
Free margin is the difference between total account equity and the sum of margin held against all open positions. It is the capital available to open new positions or absorb adverse movement on existing ones.
Margin requirements across instruments
Margin scales with both position size and the leverage applied to that instrument. On a USD account at 1:100 leverage:
EUR/USD, 1 standard lot at 1.0850, leverage 1:100: position value $108,500, margin held $108,500 ÷ 100 = $1,085.
GBP/USD, 1 standard lot at 1.2400, leverage 1:100: position value $124,000, margin held $124,000 ÷ 100 = $1,240.
XAU/USD, 1 standard lot of 100 troy ounces at 4,500, leverage 1:100: position value $450,000, margin held $450,000 ÷ 100 = $4,500.
The same leverage ratio applied to different instruments produces very different margin requirements because notional values differ. A gold position at 1:100 requires more than double the margin of a major FX position at the same leverage — the contract notional is larger.
Free margin matters more than total margin held in isolation. On a $10,000 account holding $1,085 in margin against one EUR/USD position, free margin is $8,915. Free margin is what new positions can use and what absorbs adverse movement on existing positions before the broker force-closes them at its stop-out level. The margin call is an earlier warning; the stop-out is where positions are automatically closed.
Related terms
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Common questions
What is free margin?
Free margin is account equity minus the total margin held against all open positions. It represents the capital available to open new positions or absorb adverse movement on existing ones. On a $10,000 account with $1,085 of margin held on one position, free margin is $8,915. Unrealised P&L on open positions is included in equity, so free margin shrinks as adverse movement develops, even before the position closes.
What happens at a margin call?
A margin call is the broker's warning that account equity has fallen to a defined percentage of the margin held, commonly around 100% on many retail accounts, with the exact level varying by broker. No position is closed at this stage. If equity keeps falling, it reaches the lower stop-out level, often somewhere between 20% and 50% of margin held, where the broker begins closing open positions automatically to lift the margin level above the threshold. The largest losing position is usually closed first. Both levels are broker-defined and published in the broker's terms, and the close-out executes at market price, not at a chosen level; in fast markets the close price may be substantially worse than the trigger level.