Education5 min read
What Is Margin in Trading? Understanding the Hidden Cost of Leverage
Margin is the deposit needed to open a leveraged position. Learn how it works and how to manage it. Required margin, free margin and how leverage ties them.
How Margin Works
Required margin = position size / leverage. For $100K at 30:1: margin = $3,333. Your account must have at least this much.
Free Margin vs Used Margin
Used margin: Tied up in open positions. Free margin: Available for new positions. Equity = balance + floating P/L.
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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.