Margin is the deposit your broker holds while a position is open. This shows how much a trade will lock up, and how close that leaves you to a margin call.
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Required margin = position size in units ÷ leverage, converted into your account currency. One standard lot of EUR/USD at 1:100 leverage ties up about €1,000, roughly $1,085. The rest of your balance stays as free margin.
When you open a leveraged position, you are not paying for it. Your broker sets aside a portion of your balance as a good-faith deposit against the position and returns it in full when you close. That set-aside amount is the margin.
The distinction matters because margin is routinely confused with risk. Opening one lot of EUR/USD at 1:100 uses about $1,085 of margin, but the amount you can lose is decided by where your stop is, not by the margin figure. A 20-pip stop on that position risks $200. Margin and risk are unrelated numbers that people conflate constantly.
What margin does control is how many positions you can hold at once, and how much adverse movement your account can absorb before the broker intervenes.
Your margin level is equity divided by used margin, expressed as a percentage. Equity is your balance plus or minus the floating profit on open positions, so the number falls as trades move against you.
Two thresholds matter. The margin call level, commonly 100%, is where the broker warns you and blocks new positions. The stop-out level, commonly 50%, is where the broker starts closing your positions automatically (usually the biggest loser first) until the level recovers. Both are set by the broker and both are in the account terms.
Being stopped out by the broker is materially worse than being stopped out by your own stop-loss: you lose control of which position closes and at what price. Keeping the margin level comfortably above 300% and sizing positions off risk rather than off available margin is what keeps that scenario theoretical.
Retail leverage is capped by regulators, and the caps vary enormously:
| Region / regulator | Typical retail cap on major FX |
|---|---|
| European Union (ESMA), United Kingdom (FCA) | 1:30 |
| Australia (ASIC) | 1:30 |
| United States (CFTC/NFA) | 1:50 |
| Many offshore jurisdictions | 1:500 to 1:2000 or unlimited |
Gold, indices and minor pairs are usually capped lower than majors even within the same regime. Your actual limit depends on which entity of your broker holds your account, which is why the same brand can offer 1:30 to one client and 1:1000 to another. The broker hub covers what to check before opening an account.
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