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Understanding Margin and Leverage: Key Differences
Learn how margin and leverage work together in trading. The difference, the inverse relationship, and how leverage amplifies trading power.
Margin calculator
How much of your account a broker sets aside as margin to open a position at a given leverage.
Result
Required margin
1,120.50USD
1.00% of the position's value, at 100:1.
- Position
- 100,000 EUR
- Position value in USD
- 112,049.84 USD
- Margin rate
- 1.00%
Converted at 1 EUR = 1.1205 USD.
Exchange rates: ECB reference rates, Oct 22. Reference rates are set once each business day, so results can differ slightly from a broker's live price. Everything is calculated in your browser; nothing you enter is sent anywhere.
How it is calculated
Margin is a deposit, not a cost: the broker holds it while the position is open. It is the position’s full value divided by the leverage. A position is an amount of the base currency — the first in the pair — so its value in your account currency depends on the base currency’s rate.
margin = units × (account currency per unit of base currency) ÷ leverage
Brokers set the leverage they offer, often differently for each pair, and regulators in many countries cap it for retail accounts. Check the margin requirement your broker actually applies.
Worked example
- One lot of EUR/USD is 100,000 euros. At a price of 1.1000 it is worth 110,000 US dollars.
- At 100:1 leverage the broker holds 110,000 ÷ 100 = 1,100 dollars — 1% of the position.
Risk. These calculators do arithmetic on the figures you enter. They are not advice, and they leave out spreads, commission, financing and slippage. Trading leveraged currency products carries a high risk of loss. Read our financial disclaimer.