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Free margin: meaning in forex and gold trading

Free margin is your equity minus the margin already used by open positions; it is what is left to open new trades or absorb losses.

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Definition

Free margin: Free margin is your equity minus the margin already used by open positions; it is what is left to open new trades or absorb losses.

How free margin moves

Free margin = equity − used margin. Equity includes open profit and loss, so free margin rises when open trades are in profit and falls when they are losing. If losses push equity down towards used margin, free margin approaches zero and the broker may issue a margin call or close positions at the stop out level.

Why it is not risk capital

A large free margin figure can tempt traders to open more positions. But free margin only says how much the broker will allow, not how much you should risk. Plan risk from your balance and your stop distances.

Worked example

Balance $10,000, used margin $1,500, open loss $400. Equity is $9,600 and free margin is $8,100. The margin level is 640%.

Common mistakes

  • Treating free margin as spare money.
  • Ignoring how fast free margin falls when several positions lose together.

If you follow trade signals, for example the gold signals or EUR/USD signals, understanding this term helps you size and manage each trade yourself. The free Forexuro Telegram channel shares daily market updates where these ideas are used in practice.

Margin

Margin is the deposit a broker holds to keep a leveraged position open, set by the position value divided by t...

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Margin call

A margin call is a warning that your equity has fallen close to the margin required to keep positions open.

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Leverage

Leverage lets you control a position larger than your deposit, which magnifies both profits and losses.

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Drawdown

Drawdown is the fall in account value from a peak to a later low, usually shown as a percentage.

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Tools and guides

Frequently asked questions

What happens when free margin is zero?

You cannot open new positions, and further losses can trigger a margin call or stop out.

Does free margin include open profit?

Yes, because it is calculated from equity, which includes floating profit and loss.

Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.