Free Margin
Free margin is the part of your equity not tied up as margin for open positions, and therefore available for new trades or to absorb losses.
Free margin is the part of your account equity that is not tied up as margin for open positions. It is what you can use to open new trades or absorb losses. When it runs out, you may be blocked from new trades or face a margin call. Margin rules and calculations differ by country and broker.
- Category
- Risk Management
- Reading time
- 3 min
- Also called
- Available margin, Usable margin
- Updated
Free margin in plain words
Free (or available) margin is the part of your account equity not already tied up supporting open positions.1
To work it out, take your equity and subtract the margin your open positions are using.2
The margin locked up to keep positions open is called used margin.3
How to track it
Find your equity
Start from equity, then set aside what is already committed.1
Find used margin
Find used margin — the funds the broker holds against open trades.3
Subtract
Free margin = equity − used margin.2
Watch it shrink
Notice that each new position moves more money from free to used margin.3
Know the limit
Know the limit: at a margin level of 100%, all margin is in use and you can't open new trades.3
Keep a buffer
Keep a large share of equity free to stay clear of margin calls.1
Worked examples
Example 1 — Basic calculation
200A hypothetical account has equity of 1,000 and margin of 800 on open positions.
| Free margin | 1,000 − 800 = 200 |
If equity is 10,000 and margin is 8000, available margin is 2000 — the same subtraction.1
Example 2 — Losses eat free margin
50The same hypothetical positions lose 150, so equity falls to 850.
| Free margin | 850 − 800 = 50 |
Free margin is equity not tied up in margin, so losses shrink it.1
Example 3 — Out of room
No new tradesLosses reach 200, so equity is 800 and equals used margin.
| Free margin | 0 |
| Margin level | 100% |
At a 100% margin level, all available margin is in use and no further trades can be placed.3
Free margin vs used margin
| Aspect | Free margin | Used margin |
|---|---|---|
| What it is | Unused equity | Locked deposit |
| Formula | Equity − used margin | Set by positions |
| Rises when | Gains, closing trades | Opening trades |
| At zero | No new trades | — |
Where it matters
Margin calls
Avoiding a Margin Call.
Leverage
Seeing how Leverage uses your account.
CFDs
Trading a Contract for Difference account.
Sizing
Checking room before Position Sizing.
Advantages and disadvantages
Advantages
- Shows room for new trades.
- Simple formula.
- Warns before a margin call.
Disadvantages
- Changes every tick.
- Can vanish fast with leverage.
- Brokers calculate it differently.
- Rules differ by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Definition
Beginner
Free margin is spare equity — the money not supporting any open trade.1
Margin level
Intermediate
At a 100% margin level there is no free margin left, so new trades are blocked.3 Exact rules differ by broker and country.
Buffer
Advanced
A generous cushion of free margin is the simplest protection against margin calls.1
Common mistakes
Using all free margin
Keep a buffer.
Ignoring open losses
Losses cut free margin.
Treating it as spare cash
It backs your trades.
Assuming one broker's rules
Check yours.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Free margin = equity − used margin.
- It is room for new trades and losses.
- Losses and new trades shrink it.
- At zero, new trades are blocked.
- Rules differ by country and broker.
Frequently asked questions
Is free margin my cash?
What if it goes negative?
Is it the same everywhere?
Further learning
- Margin
The basics.
- Margin Call
When free margin runs out.
- Leverage
Why it shrinks fast.
- Liquidation
What comes next.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- IG. Using margin in forex trading (opens in a new tab) Checked .
- Alpari. What is free margin and margin level? (opens in a new tab) Checked .
- CMC Markets. What is Margin in Forex? (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.