How is required margin calculated?

Required margin = position value ÷ leverage, which is the same as position value × margin %. At 30:1 leverage a $100,000 position needs $3,333 margin.

What is effective leverage?

Effective leverage is total position value divided by the margin (or equity) backing it. Higher effective leverage means larger gains and losses per price move.

What is a margin call?

A broker demand for more funds when losses shrink account equity below the required margin for open positions — required margin here is the baseline it's measured against.

Is higher leverage always riskier?

Higher leverage lowers required margin for the same position, freeing capital, but it also means a smaller adverse price move wipes out a larger share of the margin posted.

How is margin % converted to leverage?

Leverage = 1 ÷ margin fraction. A 2% margin requirement is the same as 50:1 leverage; a 3.33% requirement is 30:1.

Does required margin include unrealised P&L?

No — this is the initial margin from position value and leverage/margin %. Brokers separately track free margin, which does move with floating P&L.

Forex

Margin & Leverage Calculator

Work out required margin from position value and leverage (or margin percentage), and see the effective leverage your position uses.

Required margin is the capital a broker locks up to hold a leveraged position — the position's value divided by the leverage ratio.

Required margin

$3,333.33

Effective leverage: 30:1
Margin %: 3.33%

Worked example

A trader opens a $50,000 position where the broker requires 2% margin.

Required margin: $50,000 × 2% = $1,000
Effective leverage: $50,000 ÷ $1,000 = 50:1

The position needs $1,000 of margin and uses 50:1 effective leverage — the same position at a 3.33% requirement (30:1) would need $1,665 instead.

How this is calculated

Margin is the deposit needed to control a larger position:

required margin = position value ÷ leverage, which is the same as position value × margin %.

Effective leverage is the position value divided by the margin backing it — a quick gauge of how amplified your gains and losses are per price move.

When to use this calculator

Use this before opening a leveraged position to see how much capital the broker will lock up as margin, and what effective leverage the position actually uses. It answers 'can my account support this size?' — a different question from 'how much could I lose?'.

It is especially worth running when a broker quotes requirements inconsistently — sometimes as leverage (30:1), sometimes as a margin percentage (3.33%). The calculator converts between the two so you can compare accounts and regulators directly.

Keep a buffer in mind: a position that consumes nearly all free margin can trigger a margin call on a small adverse move. Knowing required margin precisely lets you decide how much headroom to leave rather than guessing.

Finally, remember that margin is not risk. The margin figure tells you what the position ties up, not what it can lose — pair this calculator with the position size calculator so the potential loss, not the margin requirement, is what actually sets your size.

Common mistakes

Confusing margin (capital locked up) with risk (potential loss) — a position can require little margin but still carry large risk.
Using account-wide leverage limits and position leverage interchangeably; effective leverage is specific to the size actually taken.
Not leaving a buffer above required margin, risking a margin call on a small adverse move.

Frequently asked questions

How is required margin calculated?: Required margin = position value ÷ leverage, which is the same as position value × margin %. At 30:1 leverage a $100,000 position needs $3,333 margin.
What is effective leverage?: Effective leverage is total position value divided by the margin (or equity) backing it. Higher effective leverage means larger gains and losses per price move.
What is a margin call?: A broker demand for more funds when losses shrink account equity below the required margin for open positions — required margin here is the baseline it's measured against.
Is higher leverage always riskier?: Higher leverage lowers required margin for the same position, freeing capital, but it also means a smaller adverse price move wipes out a larger share of the margin posted.
How is margin % converted to leverage?: Leverage = 1 ÷ margin fraction. A 2% margin requirement is the same as 50:1 leverage; a 3.33% requirement is 30:1.
Does required margin include unrealised P&L?: No — this is the initial margin from position value and leverage/margin %. Brokers separately track free margin, which does move with floating P&L.