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What Is Margin in Trading? | Borearis
Margin is the deposit your broker sets aside to keep a position open. It is not a fee and it is not your maximum loss.
Formula
Margin = notional value ÷ leverage. One gold lot at 4,100 with 100 ounces is 410,000 notional; at 100:1 that is 4,100 of margin.
Free margin and equity
Equity is balance plus floating profit. Free margin is equity minus used margin. When free margin runs out, the broker can close positions.
Rules
- Leave a buffer; do not use all free margin.
- Hedged positions may still require margin.
- Check the stop-out level before sizing.
Use the margin calculator to see the number for your broker's leverage.
Is margin a fee?
No. It is returned when the position is closed, unless losses consume it.
What is the stop-out level?
The equity level at which the broker closes positions automatically.
Educational content only, not investment advice.