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 1:30 leverage, margin equals 3.33% of the position's notional value; at 1:100, it is 1%. 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 1:30 leverage account holds approximately $3,617 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 available for that instrument. On a USD account at the relevant ESMA caps:
EUR/USD, 1 standard lot at 1.0850, leverage 1:30: position value $108,500, margin held $108,500 ÷ 30 = $3,617.
GBP/USD, 1 standard lot at 1.2400, leverage 1:30: position value $124,000, margin held $124,000 ÷ 30 = $4,133.
XAU/USD, 1 standard lot of 100 troy ounces at 2,318.45, leverage 1:20 (gold cap): position value $231,845, margin held $231,845 ÷ 20 = $11,592.
Different leverage caps apply to different instrument categories under ESMA rules: 1:30 for major FX, 1:20 for non-major FX and gold, 1:10 for non-gold commodities and major indices. The same nominal position size on a non-gold commodity carries triple the margin of an FX major.
Free margin matters more than total margin held in isolation. On a $10,000 account holding $3,617 in margin against one EUR/USD position, free margin is $6,383. Free margin is what new positions can use and what absorbs adverse movement on existing positions before a margin call triggers.
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 $3,617 of margin held on one position, free margin is $6,383. 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?
When equity falls to a broker-defined percentage of total margin held — typically 50% on retail accounts — the broker begins closing open positions to lift equity above the threshold. The largest losing position is usually closed first. Margin calls execute at market price, not at a chosen level; in fast markets the close price may be substantially worse than the trigger level. The exact percentage and the order in which positions close are published in the broker's terms.