Trading ConditionsMargin & Leverage (FX)
Understand Margin & Leverage in CFDs
Margin is the collateral required to open a leveraged position. Leverage can amplify profits, but it can also amplify losses. Use this page to understand the mechanics, see worked examples, and estimate margin requirements.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Ensure you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Margin Requirement
Margin is the funds set aside as collateral required to open and maintain a position. Margin is not a trading fee.
Leverage Ratio
Leverage measures the ratio between margin and notional trading exposure. For example, at 30:1, every $1 of margin gives you $30 of market exposure.
Margin Level
Margin level reflects the ratio between account equity and used margin. Formula: Equity / Used Margin × 100%. When margin level falls, the account may face a margin call or stop-out.
How margin is calculated
Margin requirements vary by instrument, account type, and regulatory settings. For FX CFDs, you can use this simplified formula to estimate required margin:
Simplified estimate
Notional = lots x Contract Size x priceMargin = Notional / leverageContract specs and conversions can differ (e.g., JPY pairs, non-USD account currency, CFD contract sizes). Use your platform's contract specification as the final reference.
What factors affect your margin requirements?
- Leverage settings (retail vs professional, instrument limits, regulatory rules)
- Price movements (notional exposure changes as price changes)
- Hedging rules (some brokers reduce margin on offsetting positions)
- Volatility and special events (brokers may adjust margin requirements)
Margin calculator
Estimate required margin for an FX position using a simplified model.
For reference only. Please refer to our Contract Specifications for our current Margin and Leverage settings.
The above calculation is for reference only.
Worked example
Example only. Assume you buy 1 Lots of EUR/USD at 1.18508 with 30:1 leverage and contract size 100,000.
Position size
- Lots: 1
- Contract size: 100,000
- Price: 1.18508
- Notional = 1 x 100,000 x 1.18508 = 118508 (USD)
Margin required
- Leverage: 30:1
- Margin = Notional / Leverage
- Margin = 118,508 / 30 = $3,950.27
- This is the collateral required to open the position (simplified).
P&L sensitivity
- If price moves against you, losses reduce equity.
- Lower equity reduces margin level.
- If margin level reaches thresholds, positions may be closed.
- Use risk controls and prudent sizing.
The example is simplified for reference. Real calculations may involve conversion rates, spreads, swaps, and contract specifications.
Frequently Asked Questions
What is margin in FX CFD trading?+
Margin is the amount of funds set aside to open and maintain a leveraged position. It is not a fee — it is the portion of your account used as collateral to support the position.
What is leverage?+
Leverage lets you gain greater market exposure with less margin. For example, 30:1 means every 1 unit of margin gives you 30 units of notional exposure. Note that leverage amplifies both potential profits and potential losses.
What is the difference between initial margin and maintenance margin?+
Initial margin is the funds required to open a trade. Maintenance margin is the minimum margin requirement to keep a position open. If your account equity falls below the maintenance margin requirement, you may receive a margin call, or positions may be subject to forced closure.
How does a margin call happen?+
A margin call may be triggered when market moves cause your account equity to fall, reducing your margin level below the broker's threshold. At that point you may need to add funds, reduce positions, or positions in your account may face forced closure.
Does higher leverage mean higher risk?+
Yes. For the same notional exposure, higher leverage typically means lower required margin, but it also amplifies both potential profits and losses. Traders should manage position sizing, stop-loss settings, and exposure prudently based on their risk tolerance.
Trade with clarity on costs, margin, and risk
Open an account in minutes and explore FX CFDs on a demo first. Know your margin, size responsibly, and use risk management tools.
Trading involves risk. Past performance is not a reliable indicator of future results.