What Is Margin?

Trading on margin lets you control a larger position with a smaller capital outlay. Required margin depends on instrument, leverage, and lot size.

Core Formulas

• Required Margin = (Notional Value / Leverage)
• Notional Value = Price × Quantity (or contract multiplier × lots)
• Free Margin = Equity − Used Margin
• Margin Level = (Equity / Used Margin) × 100%

Example

Buying 2 lots of an index CFD (contract multiplier 100) at 4,500 with 1:20 leverage:

• Notional = 4,500 × 2 × 100 = 900,000
• Required Margin = 900,000 / 20 = 45,000

Risk Controls

• Use stop-loss sized from ATR or recent volatility.
• Size positions by percent risk (e.g., 1% of equity) not by “how much margin is left”.
• Beware of overnight financing and gap risk.

Try It

Plan positions with: Margin Calculator