Margin is the amount of money required in your trading account to open and maintain a leveraged position. It acts as a security deposit, allowing you to control a much larger trade size than your actual account balance would normally permit.
Margin allows traders to open larger positions by setting aside a small percentage of the trade’s total value as a security deposit.
How Does Margin Work?
When trading with leverage, you don’t need to fund the entire position. Instead, you only need to set aside a small percentage of the total value of the trade — this is known as your margin requirement.
Example:
If the margin requirement is 1% and you want to open a position worth $100,000, you’ll need $1,000 in available funds to place the trade.
Margin requirements are calculated as a percentage of the total trade value, based on the leverage applied to the position.
Margin Example
Let’s say you're trading a standard lot of EUR/USD (100,000 units):
Leverage | Required Margin |
100:1 | $1,000 |
200:1 | $500 |
500:1 | $200 |
The higher the leverage, the lower the margin required. However, higher leverage also increases risk.
Types of Margin
Initial Margin
The amount required to open a position. This is calculated based on the size of the trade and your account’s leverage.
Maintenance Margin
The minimum equity that must be maintained in your account to keep a position open. Falling below this level may trigger a margin call or stop-out.
What Is a Margin Call?
A margin call occurs when your account equity falls below the required margin level. This serves as a warning that you need to:
Deposit additional funds, or
Close open positions to free up margin
If no action is taken and equity continues to decline, your positions may be automatically closed (stop-out) to help prevent your account from going into a negative balance.
If account equity falls below required margin levels, a margin call may occur, followed by automatic position closures (stop-out) if equity continues to decline.
Monitoring Margin in MT4/MT5
In your trading platform, you can monitor your margin levels in real time:
Balance: Total funds in your account
Equity: Balance ± open profit/loss
Margin: Funds required to maintain open trades
Free Margin: Equity minus Margin (available to open new trades)
Margin Level (%): Equity ÷ Margin × 100
MT4 and MT5 display balance, equity, margin, free margin, and margin level in the trading terminal for real-time monitoring.
Tips for Managing Margin
Always trade within your risk tolerance
Use stop loss orders to help manage potential losses
Monitor your margin level regularly
Avoid excessive leverage
Using risk management tools such as stop losses and appropriate leverage can help traders manage margin more effectively.
Margin Requirements at Blueberry
Margin requirements may vary depending on:
Instrument type (e.g. Forex, Indices, Commodities)
Leverage settings
Account type (Standard or Raw)
Regulatory jurisdiction
You can check margin requirements in the Market Watch window or by reviewing contract specifications on MT4/MT5.
Watch: Margin Explained
This video offers a beginner-friendly introduction to margin and leverage in Forex trading, including an explanation of how margin requirements work and the associated risks.
This video is for educational purposes only and does not constitute trading advice.
If you’re unsure about how margin works or would like help reviewing your trading conditions, our team is happy to assist. Reach out via live chat or email at [email protected]. We’re here to support your trading journey.