What is free margin?
Free margin is the money in your trading account that is not locked up as margin for open trades. It equals equity minus used margin. You need free margin to open new positions, and it falls as open trades lose and rises as they gain. At zero, your margin level is 100%.
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When you open a trade, your account money splits in two. The broker holds one part as a deposit for the trade. The other part is still yours to use, and that part is your free margin.
Free margin moves every time the price moves. It tells you how much room you have for new trades and how much loss your open trades can take before your account is in trouble.
What does free margin mean?
Say your account holds $1,000 and you have no open trades. All $1,000 is free margin, because none of it is held as a deposit.
Now you open a trade that needs $550 of margin. The broker sets that $550 aside, and the $450 left over is what you can still use.
Free margin is the part of your equity that is not held as used margin. Equity is your balance plus the floating profit, or minus the floating loss, of your open trades.
Platforms such as MetaTrader show free margin in the account summary, next to balance, equity and margin. Some other platforms call it available margin or available funds.
How do you calculate free margin?
The formula has one line:
Free margin = equity − used margin
Here is a worked example with round illustrative numbers. The leverage of 1:100 is illustrative too, because what you are offered depends on your broker and where you live.
- Your USD account has a balance of $1,000 and no open trades.
- You buy 0.50 lot of EUR/USD at 1.10000. That is 50,000 euros, worth 50,000 × 1.10000 = $55,000.
- At 1:100 leverage, the broker holds 1% of that as margin: $55,000 ÷ 100 = $550.
- Ignoring the spread, the trade starts with no floating profit or loss, so equity is still $1,000.
- Free margin = $1,000 − $550 = $450.
On a real platform the figure starts a little lower. A buy opens at the ask and is valued at the bid, so the spread shows as a small floating loss.
On 0.50 lot of EUR/USD a pip is worth $5. With a 1.0 pip spread, the opening loss is $5, which leaves $445 of free margin.
The margin calculator works out used margin for other pairs, trade sizes and leverage.
How does free margin limit new trades?
Every new trade needs its own margin, and that margin comes out of your free margin. If an order needs more margin than you have free, the platform will usually refuse to open it.
Stay with the spread-free example: $450 free, EUR/USD at 1.10000, leverage 1:100. Each 0.10 lot needs 10,000 × 1.10000 ÷ 100 = $110 of margin.
A second order of 0.40 lot needs 4 × $110 = $440. It fits, with $10 to spare. An order of 0.50 lot needs $550, which is $100 more than you have.
Passing that check says little about safety. After the 0.40 lot order your position is 0.90 lot, worth $9 a pip, and only $10 of free margin remains.
The new trade's 1.0 pip spread takes $4 of that at once. A further move of less than 1 pip against you would take the remaining $6.
How does free margin change as the price moves?
Once a trade is open, its used margin stays roughly where it was. Equity moves with your floating profit or loss, and free margin moves with it, dollar for dollar.
In this lesson used margin stays fixed at $550. Some platforms recalculate it as the exchange rate changes, so on a real account it can drift by a few dollars.
Go back to the single 0.50 lot trade bought at 1.10000, worth $5 a pip. Each row applies the same formula at a different price:
| EUR/USD price | Floating P/L | Equity | Used margin | Free margin |
|---|---|---|---|---|
| 1.10300 | +$150 | $1,150 | $550 | $600 |
| 1.10000 | $0 | $1,000 | $550 | $450 |
| 1.09500 | −$250 | $750 | $550 | $200 |
| 1.09100 | −$450 | $550 | $550 | $0 |
| 1.08900 | −$550 | $450 | $550 | −$100 |
A 30 pip rise adds $150 to equity and the same $150 to free margin. A 50 pip fall takes $250 away from both, while used margin stays at $550.
You can check any row with the profit and loss calculator, add the result to your balance, then subtract the used margin.
What happens when free margin reaches zero?
At 1.09100 the trade has lost 90 pips, which is 90 × $5 = $450. Equity is $550, the same as used margin, so free margin is zero.
You can find that point in advance. Divide free margin by the pip value of everything you hold: here $450 ÷ $5 = 90 pips, from 1.10000 down to 1.09100.
Treat the answer as a rough guide. The spread and any change in used margin move the real point a little.
At zero free margin your margin level, equity divided by used margin, is exactly 100%. Some brokers send a margin call at this level, and you cannot open any new trade that needs margin.
Free margin can fall below zero. At 1.08900 the loss is 110 pips, or $550, so equity is $450 and free margin is $450 − $550 = −$100. Margin level is 450 ÷ 550 × 100 = 81.8%.
You still have $450 of equity at that point, yet it no longer covers the margin your trade needs. If equity keeps falling to your broker's stop out level, the broker starts closing your positions for you.
How much free margin to keep is your own risk decision. The lesson on keeping a margin buffer covers sizing trades so that normal price swings stay well clear of zero.
Questions fréquentes
Is free margin the same as balance?
No. Balance counts only closed trades, while free margin is equity minus used margin. With no open trades, the two show the same number.
Can free margin be negative?
Yes. It drops below zero when equity falls under used margin, which means your margin level is under 100%. In this lesson, a fall to 1.08900 left free margin at −$100.
Can I withdraw my free margin?
Brokers generally limit withdrawals to money not needed as margin, and some restrict them while trades are open, so check your broker's rules. Any withdrawal lowers balance and equity, so it also lowers free margin and brings a stop out closer.
Does higher leverage give me more free margin?
For the same trade, yes. At 1:200 the 0.50 lot trade would need $275 of margin instead of $550, leaving $725 free, but each pip is still worth $5, so losses eat into equity just as fast.
Continuer à apprendre
Chapitre 6What is margin trading?Margin trading means opening a position worth more than the money in your account. The broker sets aside part of your balance, the margin, as a deposit while the trade is open. Profit and loss are counted on the full position size, so small price moves change your balance much faster than the margin suggests.
Chapitre 6What is account balance in forex?Your account balance is the money in your trading account from deposits, withdrawals and closed trades, after booked costs such as commission and swap. It does not include open positions. While a trade is open the balance stays the same, and the floating profit or loss shows up in your equity instead.
Chapitre 6What is floating (unrealized) profit and loss?Floating profit and loss is the result your open trades would show if you closed them at the current price. It changes with every tick and moves your equity, while your balance stays the same. It becomes realized, and is added to or taken from your balance, only when the trade closes.
Chapitre 6Que sont la marge, le niveau de marge et le stop out sur le forex ?La marge est la part de votre argent que le courtier bloque en garantie tant qu'un trade à effet de levier est ouvert. Le niveau de marge est égal aux fonds propres divisés par la marge utilisée, multipliés par 100%. Quand il tombe au seuil d'appel de marge du courtier, votre compte est signalé, et au seuil de stop out, le courtier commence à clôturer automatiquement vos positions.
Chapitre 6What is used margin?Used margin is the total amount your broker sets aside to keep all your open positions open. Each position's margin is its notional value divided by your leverage, and used margin adds them up. It is not a fee: the money returns to free margin when you close the trades.
Chapitre 6What is equity in a trading account?Equity is your account balance plus or minus the floating profit or loss of your open trades. It shows what the account would be worth if you closed everything at current prices. With no trades open, equity equals balance. Brokers use it to work out free margin, margin level and stop outs.
Chapitre 6What is margin level?Margin level is your equity divided by your used margin, multiplied by 100 and shown as a percentage. It tells you how much cushion your open trades have. At 100%, equity equals used margin and free margin is zero. Brokers set their margin call and stop out levels on this number, and the levels differ between brokers.
Chapitre 6What is a margin call?A margin call is your broker's warning that your margin level, equity divided by used margin, has fallen to a set threshold such as 100%. You usually cannot open new trades from that point. The call closes nothing by itself. If losses continue, the broker's stop out level is where positions start to be closed for you.
Chapitre 6What is a stop out level?The stop out level is the margin level at which your broker starts closing your open positions automatically, often beginning with the largest loss. If your stop out level is 50%, closing begins when equity falls to half your used margin. It is meant to stop your account sinking further, though a price gap can still push it below zero.
Chapitre 6Margin call example: margin call at 100% with no separate stop out.When a broker sets the margin call and the stop out both at 100%, the warning and the forced close happen at the same moment. In this example, a $1,000 account buys 0.50 lot of EUR/USD with $550 of margin at 1:100, and the trade is closed after a 90 pip fall, a $450 loss.
Chapitre 6Margin call and stop out example: 100% and 50%.In this example a $2,000 account buys 1 lot of EUR/USD at 1.10000 with $1,100 of used margin. The margin call at 100% arrives when equity falls to $1,100, 90 pips lower at 1.09100. The stop out at 50% closes the trade when equity reaches $550, at 1.08550, a loss of $1,450.
Chapitre 6What happens if you trade forex with $100?With $100 and 1:100 leverage, 0.01 lot of EUR/USD at 1.10000 uses $11 of margin and can move about 890 pips against you before a 100% margin call. At 0.05 lot the margin call comes after 90 pips, and 0.10 lot cannot be opened at all. Trade size decides how much room you have.
Chapitre 6Why margin call and stop out levels differ between brokers.Margin call and stop out levels are set by each broker, often per account type, within any rules from the regulator that licenses the account. In this lesson's example, one trade is closed after 90 pips at one broker and after 178 pips at another, so look up your own levels before you trade.
Chapitre 6Qu'est-ce que l'effet de levier sur le forex ?L'effet de levier vous permet de contrôler une position bien plus grande que votre dépôt. À 1:100, chaque $1 de marge tient $100 de devises : une position de $110,000 demande donc $1,100. Le levier détermine la marge bloquée, pas la valeur d'un pip. Votre risque réel vient de la taille de position que vous choisissez.
Chapitre 6Margin cheat sheet.Balance is the cash from deposits, withdrawals and closed trades. Equity is balance plus the floating profit or loss on open trades. Used margin is the deposit your open trades hold, and free margin is equity minus used margin. Margin level is equity divided by used margin, times 100. A margin call warns; a stop out closes trades.
Chapitre 6How can you avoid a margin call?Margin level is your equity divided by your used margin, and a margin call comes when it falls to your broker's threshold. To stay clear, keep positions small compared with your equity, set stop losses that close losing trades long before that point, and leave plenty of free margin unused.Courtiers partenaires
