Margin calculator
How the margin calculator works
This margin calculator divides the full value of a position by the leverage you use. Margin is not a fee. It is a deposit your broker holds while the position is open, to cover potential losses. What you gain or lose, however, is based on the full position value, not on the margin.
Required margin = notional value ÷ leverage
Worked example
Illustrative figures: you open 0.5 lots of GBP/USD at 1.2700. Half a lot is 50,000 pounds, worth 50,000 × 1.2700 = $63,500. At 30:1 leverage, the margin required is $63,500 ÷ 30 = about $2,116.67.
Now consider a 1% move against you. That costs 1% of $63,500, or $635: roughly 30% of the margin you put down. This is the core point about leverage. A modest market move becomes a large change in your account.
Leverage limits you may meet
| Instrument (UK/EU retail CFDs) | Maximum leverage | Minimum margin |
|---|---|---|
| Major currency pairs | 30:1 | 3.33% |
| Other currency pairs, gold, major indices | 20:1 | 5% |
| Other commodities, minor indices | 10:1 | 10% |
| Individual shares | 5:1 | 20% |
| Crypto-assets | 2:1 | 50% |
Australia's caps are similar. In the US, retail forex is limited to 50:1 on major pairs and 20:1 on others. In the UK and EU, a broker must begin closing positions when your margin level falls to 50% of the required margin.
How to read the result
If the required margin is a large share of your account, the position is too big for it. Leave free margin to absorb normal price swings, or a small move can trigger a margin call. Size the trade from your risk limit with the position size calculator, and check what each pip is worth with the pip calculator. For a plain-English introduction, see how forex trading works.
Sources
- European Securities and Markets Authority, CFD product intervention measures
- US Commodity Futures Trading Commission and National Futures Association, retail forex leverage limits