What margin, leverage and margin level mean
Margin is a deposit. When you open a leveraged position, the broker sets aside part of your equity as security for as long as the position is open. It is not a fee and it is not a loss: it comes back when the position closes. Leverage is the ratio between the position and that deposit. At 1:30 the broker asks for 1/30 of the position value, which is 3.33%.
The calculation has two steps. First the position value in your account currency: lots × units per lot × price, converted if the quote currency differs from yours. Then divide by the leverage. One standard lot of EUR/USD at 1.0850 is worth $108,500 for a USD account, so at 1:30 the margin is $108,500 ÷ 30 = $3,617.
Margin level, margin call and stop-out
Margin level is equity divided by required margin, as a percentage. With $10,000 against $3,617 of margin it is 276%. As the position loses money, equity falls, and so does the level. Most brokers define two thresholds, and both are broker settings:
- Margin call. Often at 100%, where equity equals the margin. From here you usually cannot open new positions, and the broker may warn you. Some brokers call it earlier.
- Stop-out. Often at 50% (some use 20% or other values). The broker starts closing positions automatically, usually the most losing one first, until the level recovers.
The calculator turns those thresholds into distance. In the first example, a margin call comes after a loss of about $6,383 and a stop-out after $8,192, which on one lot is roughly 638 and 819 pips (7.5% of the position value).
Leverage changes the margin, not the risk
This is the point most people miss. Take 0.5 lot of EUR/USD on $10,000 and change only the leverage. The margin falls as leverage rises, but the distance to the stop-out hardly moves, because the loss per pip is the same:
| Leverage | Margin for 0.5 lot EUR/USD | Margin level on $10,000 | Pips to the stop-out |
|---|---|---|---|
| 1:10 | $5,425 | 184% | 1,458 |
| 1:20 | $2,712 | 369% | 1,729 |
| 1:30 | $1,808 | 553% | 1,819 |
| 1:50 | $1,085 | 922% | 1,892 |
| 1:100 | $542 | 1,843% | 1,946 |
| 1:200 | $271 | 3,687% | 1,973 |
| 1:500 | $108 | 9,217% | 1,989 |
What leverage really does is let you open a larger position on the same equity. The same account at 1:500 can hold 46 lots of EUR/USD before the margin is used up, against 2.8 at 1:30. Each extra lot adds $10 of loss per pip, so the room to the stop-out shrinks quickly: with $1,000 and 4 lots at 1:500, the margin is only $868, the margin level looks fine at 115%, and yet a move of 14 pips against the position reaches the stop-out. The leverage you actually use is the position value divided by your equity (434× in that case), and that is the number to watch, not the ratio your broker offers.
Size by risk first, then check the margin
Margin is a limit your broker imposes, not a plan. The sensible order is to set the stop from your chart, size the trade from the share of the account you will risk (the lot size calculator and the position size calculator do that), and only then use this page to confirm the position leaves a healthy margin level and a stop-out well beyond your stop. If your stop is beyond the stop-out, the broker closes you first.
Why your broker's number may differ
- Margin rates by instrument. Many brokers set a different leverage for major pairs, other pairs, metals, indices and crypto, and regulators in some regions cap retail leverage (for example 30:1 on major forex pairs for retail clients in the EU and UK). Use the leverage for the instrument you trade.
- Tiers. Large positions can attract higher margin rates.
- Margin currency and price. Brokers convert at their own live rates, so the figure moves with the market.
- Several positions. Brokers net or add margin differently when you hold opposite positions (hedging), and open profit or loss changes equity.
- Weekends and events. Some brokers raise margin before the weekend or before major news.
Treat the result as an estimate and compare it with the figure in your platform before you trade. Leveraged trading can lose more than the money you deposit with some brokers; read your broker's terms on negative balance protection.
The formulas
required margin = position value ÷ leverage
margin level = equity ÷ required margin × 100
free margin = equity − required margin
loss to a threshold = equity − required margin × threshold %
pips to the threshold = loss to the threshold ÷ (value of one pip per lot × lots)The quote→account rate is 1 when the quote currency is your account currency, 1 ÷ price when your account currency is the base, and a cross rate otherwise. The pip value is the same as in the pip value calculator.
Worked examples
One lot of EUR/USD at 1:30 on $10,000
Position value $108,500, margin $3,617, free margin $6,383, margin level 276%. The margin call comes after about 638 pips against you and the stop-out after about 819. That is far beyond any sensible stop on this account, which is the point: the margin is not the risk.
A $500 account with 0.1 lot at 1:30
Position value $10,850, margin $362, margin level 138%. Free margin is only $138. A margin call arrives after about 138 pips and the stop-out after 319, and the position is 22× your equity. A 1% risk on $500 is $5, which with a 20 pip stop is 0.025 lots: far smaller than this.
The same position at 1:30 and at 1:500
One lot on $10,000. At 1:30 the margin is $3,617 and the stop-out is 819 pips away. At 1:500 the margin is $217 and the stop-out is 989 pips away. Higher leverage freed $3,400 of margin and barely moved the real limit, because the loss per pip did not change.
Using the leverage: $1,000, 4 lots at 1:500
The margin is $868, only 87% of the account, and the margin level is 115%. But the position is worth $434,000, 434× the equity, each pip moves $40, and the stop-out is just 14 pips away. A normal day's movement can do that.
USD/JPY: no conversion needed
With a USD account the position value of one lot is simply the 100,000 base units, $100,000. At 1:30 the margin is $3,333 and the margin level on $10,000 is 300%. With JPY as the quote currency the pip is worth about $6.67, so the room to the stop-out is 1,250 pips.
Gold: 0.5 lot at 1:20
With 100 ounces per lot and gold at 2,400, 0.5 lot is worth $120,000, and the margin at 1:20 is $6,000. Each $1 move is $50, so the margin call comes after a $80 move against you and the stop-out after $140 (the calculator shows these as pips of 1.00).
Frequently asked questions
How do you calculate margin in forex?
Margin = position value ÷ leverage, where the position value is lots × units per lot × price, in your account currency. One lot of EUR/USD at 1.0850 is worth $108,500 and at 1:30 needs $3,617 of margin.
What is margin level, and what is a good one?
Margin level is equity ÷ required margin, as a percentage. There is no universal good number: a higher level means more room before a margin call. What matters is the distance it represents: the calculator shows how many pips price can move before the margin call and stop-out, which you can compare with your stop. For one lot on $10,000 at 1:30 the level is 276%.
What is the difference between a margin call and a stop-out?
A margin call is a warning level, often 100%, at which you typically cannot open new positions. The stop-out is a lower level, often 50%, at which the broker starts closing positions automatically. Both numbers are set by the broker.
Does higher leverage mean higher risk?
Not by itself: the risk of a position comes from its size and your stop. Higher leverage lets you open a bigger position on the same equity, and the bigger position is the risk. The same position at 1:30 and 1:500 has almost the same distance to the stop-out (819 against 989 pips on one lot with $10,000).
Why does my broker show a different margin?
Brokers set margin rates by instrument, apply tiers to large positions, convert at their own live rates, and treat several positions differently (hedging or netting). Some raise margin before weekends or news. Use this page for an estimate and check the figure in your platform.
What happens at a stop-out?
The broker closes one or more positions at market price, usually starting with the biggest loser, until the margin level is back above the stop-out. In a fast move the fill can be worse than the level, and with some brokers a loss can exceed your deposit. Read your broker's terms on negative balance protection.
Check the margin, then place the stop well inside it.
Margin tells you how far price can go before you are closed out. These indicators help you decide where your own stop belongs.
Last updated November 2026. For education only. Not financial advice. Results depend on your inputs and cannot predict future performance.