Margin: meaning in forex and gold trading
Margin is the deposit a broker holds to keep a leveraged position open, set by the position value divided by the leverage.
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Margin: Margin is the deposit a broker holds to keep a leveraged position open, set by the position value divided by the leverage.
Used margin and equity
When you open a leveraged trade the broker sets aside part of your account as used margin. The formula is position value ÷ leverage. Your equity is your balance plus or minus open profit and loss. Free margin is equity minus used margin, and the margin level is equity ÷ used margin × 100.
Margin is not a cost
Margin is not a fee. It is returned when you close the position. The real cost of a trade is the spread, any commission and the swap if you hold overnight. But margin limits how many positions you can open and how much loss you can absorb before a margin call.
Worked example
You buy 0.50 lots of GBP/USD at 1.3400 with 30:1 leverage. The position is worth 50,000 pounds, or 67,000 dollars. Margin is 67,000 ÷ 30, about 2,233 dollars. With equity of 5,000 dollars the margin level is about 224%.
Common mistakes
- Reading free margin as money that is safe to risk.
- Opening many correlated positions that all use margin at once.
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.
Related terms
Tools and guides
Frequently asked questions
Is margin a fee?
No. It is a deposit held while the trade is open and released when you close it.
How do I calculate margin?
Position value divided by leverage. The margin calculator does it for any pair or gold.
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.