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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.
Leverage calculator
How leveraged a position really is: its full value measured against the money in your account.
Result
Effective leverage
11.3:1
A position worth 112,530.24 USD against 10,000.00 USD.
- Position
- 100,000 EUR
- Position value in USD
- 112,530.24 USD
- A 1% move in EUR/USD
- ±1,125.30 USD
- That move as a share of equity
- ±11.3%
Converted at 1 EUR = 1.1253 USD.
Exchange rates: ECB reference rates, Oct 16. 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
The leverage a broker advertises is a maximum. The leverage you actually carry is the value of the open position divided by your equity, the money in the account. Enter only the margin you are putting up instead, and the result is the leverage on that amount.
effective leverage = position value in account currency ÷ equity
Leverage multiplies every move. A 1% change in the pair changes the position’s value by 1% of its full size, which, as a share of equity, is 1% times the leverage.
Worked example
- One lot of EUR/USD at 1.1000 is worth 110,000 US dollars.
- With 10,000 dollars in the account, effective leverage is 110,000 ÷ 10,000 = 11:1.
- A 1% move in EUR/USD changes the position's value by about 1,100 dollars — 11% of the account.
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.