Used margin and free margin
Used margin is held against your open positions and cannot be touched. Free margin is what is left, and it is what absorbs a position moving against you. A trader with heavy positions has little free margin, which is why an ordinary drawdown can force positions closed.
Margin level
Equity divided by used margin, as a percentage. Above a few hundred percent is comfortable. Brokers usually send a margin call warning around 100% and start closing positions automatically at a stop-out level, often 50%. Those two numbers are in your broker’s terms and are worth knowing before you need them.
A margin call is not a fee
It is the broker protecting itself from a position that can lose more than your deposit. Positions are closed at market, starting with the largest loser at most brokers, and you do not choose which. It is the worst possible time for someone else to be picking your exits.
Margin returns when the trade closes
It is released back into your balance the moment the position is closed, win or lose. The only money that has actually gone is the loss, the spread, the commission and any swap.
In short
| Used margin | Held against open positions |
|---|---|
| Free margin | Equity minus used margin |
| Margin level | Equity ÷ used margin, as a percentage |
| Stop-out | Where the broker force-closes, often 50% |
Common questions
Can I lose more than my deposit?
At a broker offering negative balance protection, no — and it is legally required in several jurisdictions. Without it, a violent gap can leave the account below zero and the debt is yours. Check whether your broker offers it before it matters.
Why did my broker close my trade?
Almost always because the margin level fell to the stop-out. That is a size problem rather than a market problem: the position was too large for the free margin available to absorb a normal move.
Does margin cost interest?
Margin itself does not. The overnight financing charge on the position is the swap, which is separate and is charged whether the trade is winning or losing.
Trading forex and CFDs on margin carries a high level of risk. Most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade.