Margin & Leverage Calculator

What margin is

Margin is the amount of money a brokerage holds in trust while an opened levered position exists. Margin does not represent fees nor represents your maximum loss. What allows a modest initial investment to have a greater impact on the market (in terms of dollars) is the leverage that occurs when $30 of exposure is backed by $1 of margin. The required margin is calculated as follows: the exposure and the leverage used to achieve the exposure are divided by each other. A brokerage will release required margin once a trader closes their trade. While the majority of investors seek out information about how many percent of a trading account is being utilized by a single position and what price they are getting for that percent, that's exactly what this tool provides based upon the instrument entered, the lot size of the entry, and the level of leverage used to get into the position.

The formula

notional = contract size × lots × price
required margin = notional ÷ leverage
effective leverage = notional ÷ account equity

The notional represents the total amount of money that you are responsible for. In terms of a single trade (1 standard lot) of EUR/USD at an exchange rate of 1.09, this means 100,000 x 1.09 = $109,000 of exposure. For example, if you enter into a trade with a broker using 1:30 leverage and they require you to put up margin of 109,000 / 30 = $3,633 when entering into the position, when the position is closed the margin will be returned by the broker.

It's the leverage that truly counts. Put that $3,633 margin in front of a $10,000 account and your effective leverage is approximately 11x (from 109,000 / 10,000) - although the account has an upper limit to leverage of 30x. For example an 11x position would lose 11% of your capital for each 1% move against you. The headline leverage is just the cap on how much you can be exposed; the amount you are truly risking is completely up to you as long as you don't go over the cap.

The same maths across forex, crypto, CFDs and futures

The process for required margin works similarly in all leveraged markets; however, contract size and the leverage cap will vary. Standard Forex lots are 100,000 units of the base currency so margin requirements increase as you buy/sell pairs that have larger prices. In Crypto positions, the notional value is simply quantity multiplied by price. Exchange leverage in Crypto can be much higher than the maximum allowed in Forex and therefore liquidation occurs quickly so always refer to the current level on the liquidation price calculator. CFDs of shares and indexes typically use a contract size set by the brokerage firm. As such they also usually express a flat percentage margin requirement (5% is 1:20) versus a round leverage figure. Commodities and Futures require an initial margin per contract set by the exchange and not a simple division. Select the instrument above and the contract size will be populated. Edit to represent your own brokerage firms trading schedule.

Using it to stay solvent

Margin represents the point at which the leverage becomes less of an abstract concept. Your margin as well as your effective leverage will determine how much space exists for the price of the instrument in the trade to move against your position before there is enough money lost that would trigger a margin call. A trader does not typically "blow" up due to their analysis of a trade being incorrect one time; a trader blows up when his or her effective leverage is so large that normal trading volatility (noise) results in liquidation before the trader's theory can be proven. Use this page to size a trade using the position size calculator, to perform the pip math on the size selected using the pip value calculator, and to determine if your resulting effective leverage provides a survivable cushion.

The honest limits

The arithmetic is exact, but your broker's margin schedule is the final word. Regulated retail brokers cap leverage (commonly 1:30 on major forex, less on volatile pairs), while offshore and crypto venues go much higher. Many use tiered margin, where larger positions require a higher margin percentage, so a big trade can tie up proportionally more than a flat divide suggests. Required margin is also not the same as maintenance margin, the lower level your equity must stay above to avoid liquidation, and some brokers raise margin overnight or over the weekend. Treat the figure here as the baseline your broker builds on, and read effective leverage, not the headline cap, as your real risk.