What Is Margin in Forex? Complete Guide with Examples (2026)

Keyword data (DataForSEO, March 2026): "forex margin" — 110 monthly searches (US), KD: 2 | "margin in forex" — 110 monthly searches (US), KD: 2

Margin is one of the most important — and most misunderstood — concepts in forex trading. Getting it wrong can wipe out an account. Getting it right unlocks the ability to trade meaningful position sizes with a relatively small account balance.

This guide explains margin in plain language, with real calculation examples.

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What Is Margin in Forex?

Margin is the amount of money your broker sets aside from your account as collateral to keep a trade open.

It is not a fee. It is not a cost. It is a deposit that is held while your position is open and released when you close the trade.

Think of it as a security deposit on a trade. Your broker requires it to ensure you have skin in the game. If the market moves against you and your account balance falls below a minimum threshold, the broker uses this margin to protect themselves from losses exceeding your deposit.

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Margin vs Leverage: What's the Difference?

Margin and leverage are two sides of the same concept:

• Leverage describes how many times larger your position is than your deposit
• Margin is the percentage of the total position size you need to hold

The relationship:

Margin % = 1 / Leverage × 100

Leverage	Required Margin
1:10	10%
1:50	2%
1:100	1%
1:200	0.5%
1:500	0.2%
1:1000	0.1%

So if you have 1:100 leverage, you need 1% of the total position value as margin.

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Key Margin Terms Explained

Understanding these five terms is essential before trading:

1. Required Margin (Used Margin)

The amount your broker locks up to open and maintain your trade.

Formula: Required Margin = (Position Size × Opening Price) / Leverage

Example: You want to buy 1 standard lot of EUR/USD (100,000 units) at 1.0850, with 1:100 leverage.

Required Margin = (100,000 × 1.0850) / 100 = $1,085

Your broker holds $1,085 from your account while this trade is open.

2. Balance

Your total account equity, excluding the effect of open trades. This is what you deposited plus closed profits/losses.

3. Equity

Balance + Floating Profit or Loss from open positions

If your balance is $5,000 and your open trades are showing a $200 loss, your equity is $4,800.

Equity is the "real-time" value of your account.

4. Free Margin

Equity − Used Margin

Free margin is the amount available for opening new trades.

Example:

• Balance: $5,000
• Open trade required margin: $1,085
• Floating loss: −$200
• Equity: $4,800
• Free Margin: $4,800 − $1,085 = $3,715

If Free Margin drops to zero, you cannot open new trades.

5. Margin Level

Equity / Used Margin × 100%

This percentage tells you how healthy your account is relative to your open positions.

Margin Level	Meaning
Above 100%	Healthy — sufficient buffer
100%	Equity equals used margin — no free margin
80–100%	Warning zone — approaching margin call
At broker's Margin Call level	Broker sends warning
At broker's Stop Out level	Positions begin closing automatically

A margin level above 200% is generally considered comfortable. Below 100% is dangerous.

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What Is a Margin Call?

A margin call occurs when your margin level falls to the level specified by your broker. At this point, the broker issues a warning and may:

• Send you an email or in-platform notification
• Restrict you from opening new trades
• Request you to deposit more funds

The margin call level varies by broker. Common levels: 100%, 80%, or 50%.

Exness Margin Call and Stop Out

Exness uses:

• Margin Call Level: 60% (for most Standard accounts)
• Stop Out Level: 0% (Exness uses a specific zero-equity stop out; professional accounts differ)

This means Exness will start closing positions when your margin level hits the stop out threshold. The most losing trade is closed first.

Source: exness.com/trading/margin-and-leverage/, March 2026.

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What Is a Stop Out?

A stop out is the automatic closure of your open positions when your margin level falls to the broker's stop out level. The broker closes your most losing position first, then continues closing positions if the margin level does not recover.

Stop out protects the broker (and in some cases you) from a negative balance. Many regulated brokers offer negative balance protection, meaning your account cannot go below zero even in extreme market conditions.

Exness provides negative balance protection automatically.

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Worked Example: Full Margin Scenario

Setup:

• Account balance: $2,000
• Open: 1 lot EUR/USD long at 1.0850
• Leverage: 1:100

Step 1: Required Margin $2,000 account / $1,085 required margin = 184% initial margin level

Step 2: Market moves against you EUR/USD falls from 1.0850 to 1.0700 = 150 pip loss 1 lot EUR/USD = $10/pip → Loss = $1,500

Step 3: Recalculate

• New Equity: $2,000 − $1,500 = $500
• Used Margin: $1,085 (unchanged)
• Margin Level: $500 / $1,085 × 100 = 46%

At this point, if the broker's stop out level is 50%, your position would be automatically closed.

Lesson: A 150-pip move against a 1-lot position on a $2,000 account triggers a stop out. This is why position sizing relative to account balance is critical.

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How Margin Changes with Position Size

Using EUR/USD at 1.0850 and 1:100 leverage:

Position Size	Required Margin	% of $1,000 Account
0.01 lot (1,000 units)	$10.85	1.1%
0.1 lot (10,000 units)	$108.50	10.9%
0.5 lot (50,000 units)	$542.50	54.3%
1.0 lot (100,000 units)	$1,085	108.5%

A $1,000 account cannot open a 1-lot EUR/USD position at 1:100 leverage — it does not have enough margin. You would need at least $1,085.

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Margin on Different Account Types

Different account types at brokers like Exness offer different leverage and therefore different margin requirements:

Account Type	Max Leverage	Margin Req. (1 lot EUR/USD at 1.0850)
Standard	Up to 1:2000	From $54.25
Pro	Up to 1:unlimited*	Varies
Raw Spread	Up to 1:2000	From $54.25

*Unlimited leverage at Exness requires account balance below $1,000 and specific verification. As balance grows, leverage reduces automatically.

Source: exness.com/trading/margin-and-leverage/, March 2026.

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Margin and Risk Management

Margin is not a risk management tool — it is a mechanical requirement. True risk management works differently.

The professional approach:

1. Risk per trade in dollars, not margin: Decide to risk 1% of your $5,000 account = $50 per trade
2. Set your stop-loss first: If your stop is 50 pips away on EUR/USD, 1 pip = X based on lot size
3. Calculate lot size from risk, not from margin: $50 risk ÷ 50 pips ÷ $1/pip = 1 micro lot (0.1 lot at 0.1 lot = $1/pip → need 0.1 lots = $5/pip × 10 pips... adjust accordingly)

Simple rule of thumb: Never commit more than 5–10% of your account as used margin across all open positions combined. This keeps your margin level well above danger zones.

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Frequently Asked Questions

What happens to my margin when I close a trade? The required margin is released back to your free margin immediately when the trade closes.

Does margin affect my profit/loss calculation? No. Your profit or loss is calculated on the full position size, not on the margin. This is the double-edged nature of leverage — a $1,085 margin controls a $108,500 trade (1 lot at 1.0850 with 1:100 leverage).

Is margin the same as a fee? No. Margin is a temporary hold on your funds. It is fully released when your trade closes. There is no charge for using margin itself (the cost of leverage comes through the spread and swap, not through a margin charge).

What is a cross margin vs isolated margin? Most retail forex brokers use cross margin by default — all your open positions share the same pool of account equity. If one trade loses heavily, it reduces the free margin available for others. Isolated margin (common in crypto derivatives) isolates each position's margin separately.

Can I change my leverage? Yes, with most brokers. In Exness, you can adjust your leverage in the Personal Area. Reducing leverage increases required margin; increasing leverage reduces it.

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Summary

• Margin is the collateral your broker holds while a position is open — it is not a fee
• Leverage and margin are inversely related: higher leverage = lower margin requirement
• Key account metrics: Balance, Equity, Used Margin, Free Margin, Margin Level
• Margin call and stop out occur when equity falls too far relative to used margin
• Never confuse margin management with risk management — use stop-losses and position sizing, not just margin calculations, to manage your exposure

Open a low-margin, high-leverage Exness account

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Risk Warning: Trading on margin involves high risk. Leverage amplifies both profits and losses. You can lose more than your initial deposit if your broker does not provide negative balance protection. Always understand your broker's margin call and stop out levels before trading.