{"id":21567,"date":"2026-10-05T06:43:57","date_gmt":"2026-10-05T06:43:57","guid":{"rendered":"https:\/\/dev.trade.com\/en\/?post_type=trade_hub&p=21567"},"modified":"2026-10-05T06:43:57","modified_gmt":"2026-10-05T06:43:57","slug":"what-is-margin-in-forex-trading","status":"publish","type":"trade_hub","link":"https:\/\/www.trade.com\/en\/eu\/trade-hubs\/what-is-margin-in-forex-trading\/","title":{"rendered":"What Is Margin in Forex Trading?"},"content":{"rendered":"

Margin<\/strong> is the amount of money your broker reserves to keep a leveraged trade open. It is not a fee or a trading cost, and the money is not automatically lost when the position is closed.<\/p>\n

Instead, margin acts as a form of collateral. It represents the minimum amount of capital that must remain available to support an open position.<\/p>\n

Margin is closely connected to leverage<\/a>. Leverage allows traders to control positions larger than the capital they commit, while margin is the portion of capital required to maintain those positions.<\/p>\n

Key Takeaways<\/h3>\n
    \n
  • Margin is the amount of capital reserved to support a leveraged position<\/strong>.<\/li>\n
  • Margin is not a fee<\/strong> and is generally released when the position is closed.<\/li>\n
  • Leverage and margin describe the same relationship in different ways.<\/li>\n
  • Used margin<\/strong> is the amount currently reserved for open positions.<\/li>\n
  • Free margin<\/strong> is the equity still available to support existing positions or open new ones.<\/li>\n
  • Falling equity can lead to a margin close-out<\/strong> if the account no longer meets the broker’s requirements.<\/li>\n
  • Position sizing and risk management are essential when trading on margin.<\/li>\n<\/ul>\n

    Margin Requirements<\/h2>\n

    Sometimes, instead of leverage, you’ll see a broker with margin requirements. These are essentially the same thing, just represented in different ways. For instance, a 10% margin requirement lets you open positions by only setting 10% aside as margin. Effectively, this is identical to 1:10 leverage.<\/p>\n

    How does margin work?<\/h2>\n

    Let\u2019s\u00a0say you want to open\u00a0a EUR\/USD trade sized at 1 micro lot, which equals 1,000 units of the base currency. If your account is denominated in euros and you are trading EUR\/USD, that position\u00a0represents\u00a0\u20ac1,000 of exposure.<\/p>\n

    Without leverage, you would need the full \u20ac1,000 to open the position. With 1:10 leverage, the broker only needs to reserve \u20ac100 as margin.<\/p>\n

    The calculation is:
    \nPosition value \u00f7 leverage = required margin\u00a0<\/strong>
    \nSo, in this case:
    \n\u20ac1,000 \u00f7 10 = \u20ac100 <\/strong><\/p>\n

    Used Margin, Free Margin and Equity<\/h2>\n

    The next key aspect to understanding margin are the concepts of\u00a0used margin<\/strong>\u00a0and\u00a0free margin<\/strong>.<\/p>\n

    When you open a trade, part of your account becomes\u00a0used\u00a0margin<\/strong>. This is the amount currently reserved for open positions.<\/p>\n

    The funds you can use to open more trades\u00a0free\u00a0margin<\/strong>. However,\u00a0free margin<\/strong>\u00a0isn’t\u00a0simply your account balance when used margin is subtracted; it is also affected by the changes in the positions you have\u00a0open.<\/p>\n

    When you open a position, your\u00a0used margin<\/strong>\u00a0for that position is set, and it\u00a0doesn’t\u00a0change. What does change is your\u00a0equity<\/strong>.<\/p>\n

    Equity\u00a0<\/strong>is your account balance plus or minus the\u00a0floating profit or loss<\/strong>\u00a0from your open trades. If your trade moves in\u00a0your favor, your equity increases. If it moves against you, your equity decreases.<\/p>\n

    The basic formula is:
    \nFree margin = Equity – Used margin <\/strong><\/p>\n

    Free Margin and Equity in Practice<\/h2>\n

    For\u00a0an example,\u00a0let’s\u00a0say you deposit\u00a0\u20ac1,000<\/strong>\u00a0and open a trade that requires\u00a0\u20ac100\u00a0margin<\/strong>.<\/p>\n

    At entry:<\/p>\n

      \n
    • Balance<\/strong>: \u20ac1,000<\/li>\n
    • Floating P\/L<\/strong>: \u20ac0<\/li>\n
    • Equity<\/strong>: \u20ac1,000<\/li>\n
    • Used margin<\/strong>: \u20ac100<\/li>\n
    • Free margin<\/strong>: \u20ac900<\/li>\n<\/ul>\n

      If the trade moves in your favor by\u00a0\u20ac40<\/strong>:<\/p>\n

        \n
      • Balance<\/strong>: \u20ac1,000<\/li>\n
      • Floating P\/L<\/strong>: +\u20ac40<\/li>\n
      • Equity<\/strong>: \u20ac1,040<\/li>\n
      • Used margin<\/strong>: \u20ac100<\/li>\n
      • Free margin<\/strong>: \u20ac940<\/li>\n<\/ul>\n

        What Happens if Equity Runs Low?<\/h2>\n

        If the market moves against your open positions, your equity decreases. If it falls too far compared to the margin\u00a0required\u00a0for your trades, your broker may close one or more positions automatically.<\/p>\n

        For\u00a0EU retail clients<\/strong>\u00a0trading CFDs, ESMA rules require providers to close positions when\u00a0account equity falls to 50% of the total\u00a0initial\u00a0margin\u00a0required\u00a0across open CFD positions<\/strong>. This is known as the margin close-out rule.<\/p>\n

        For newer traders,\u00a0it’s\u00a0also crucial to select a broker with\u00a0negative balance protection<\/strong>. This means your losses are limited to the funds in your trading account, so you cannot lose more than you deposited or end up owing money to the broker.<\/p>\n

        You shouldn\u2019t treat a margin close-out as a normal risk-management tool. If the platform is forced to close trades for you, the account has already reached a dangerous point. To be a consistent trader, you must plan your trade size, place stop losses, and be aware of your total exposure before entering.<\/p>\n

        Conclusion<\/h2>\n

        Margin is a core part of leveraged forex trading. It lets traders control larger positions with less upfront capital, but it also makes risk management much more important.<\/p>\n

        Understanding used margin, free margin, equity, and margin close-out helps traders see how much room their account really has before a position becomes dangerous.<\/p>\n

        The key takeaway is simple:\u00a0margin\u00a0can make trading more flexible, but it should never be used carelessly. New traders should always calculate their risk before entering, use sensible position sizes, and treat margin close-out as something to avoid, not something to rely on.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Margin is the amount of capital a broker sets aside to support a leveraged forex or CFD position. Learn how margin works, how it relates to leverage, and why understanding free margin and equity is essential for managing trading risk.<\/p>\n","protected":false},"author":6,"featured_media":21627,"comment_status":"open","ping_status":"closed","template":"","meta":[],"trade_hub_cat":[165],"trade_hub_type":[163],"trade_hub_tag":[],"class_list":["post-21567","trade_hub","type-trade_hub","status-publish","has-post-thumbnail","hentry","trade_hub_cat-foundations","trade_hub_type-articles"],"acf":[],"yoast_head":"\nWhat Is Margin? | Learn Trading With Trade.com<\/title>\n<meta name=\"description\" content=\"Learn what margin is in forex trading, how margin requirements work, and how used margin, free margin, equity, and margin close-out affect leveraged trades.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.trade.com\/en\/eu\/trade-hubs\/what-is-margin-in-forex-trading\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is Margin in Forex Trading?\" \/>\n<meta property=\"og:description\" content=\"Learn what margin is in forex trading, how margin requirements work, and how used margin, free margin, equity, and margin close-out affect leveraged trades.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.trade.com\/en\/eu\/trade-hubs\/what-is-margin-in-forex-trading\/\" \/>\n<meta property=\"og:site_name\" content=\"Trade.com\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.trade.com\/wp-content\/uploads\/2026\/10\/What-Is-Margin-in-Forex-Trading_.png\" \/>\n\t<meta property=\"og:image:width\" content=\"535\" \/>\n\t<meta property=\"og:image:height\" content=\"338\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.trade.com\\\/en\\\/eu\\\/trade-hubs\\\/what-is-margin-in-forex-trading\\\/\",\"url\":\"https:\\\/\\\/www.trade.com\\\/en\\\/eu\\\/trade-hubs\\\/what-is-margin-in-forex-trading\\\/\",\"name\":\"What Is Margin? 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