Free Margin
Trading BasicsThe amount of money in your account that is not tied up as collateral for open positions. Free margin equals equity minus used margin.
What Is Free Margin?
Free margin is the portion of your account Account Equity that is available to open new positions. It equals your equity minus your Used Margin. If your account equity is $5,000 and you have $1,500 in used margin, your free margin is $3,500.
Why Free Margin Matters
Free margin determines two things: how many additional positions you can open, and how much room your existing trades have to move against you before a margin call. If your free margin reaches zero, you cannot open new trades. If it goes negative, you are approaching a stop-out where the broker closes your positions.
Monitoring Free Margin
Your trading platform shows free margin in real time, updated with every price tick. It increases when your open trades are in profit and decreases when they are in loss. Experienced traders keep a close eye on free margin as a percentage of their total equity. A good practice is to never use more than 20-30% of your equity as margin, leaving 70-80% as free margin. Our Margin Calculator helps you plan position sizes that maintain healthy free margin levels.
Related Terms
Margin
The deposit required to open and maintain a leveraged position. Margin is not a fee. It is collateral held by the broker while your trade is open.
Used Margin
The total amount of margin currently locked as collateral for all open positions. Also called required margin.
Margin Level
The ratio of account equity to used margin, expressed as a percentage. Margin level = (Equity / Used Margin) x 100%. Below 100% typically triggers a margin call.
Account Equity
The real-time value of your account including open positions. Equity = Account Balance + Floating P/L. Equity determines your margin level and available margin.