Enter a trade size, an entry price and a leverage ratio, and you get the amount your broker holds and the margin level it produces — then the figure an anxious trader actually wants: how much loss stands between you and a margin call, and between you and a stop out.
What margin is and why it is held
Margin is collateral, not a fee. When you open a position your broker sets aside part of your balance and freezes it for as long as the trade is open, then returns it in full when the trade closes. Nothing is deducted and nothing is paid to anyone: margin is not a cost of trading. The costs are spread, commission and swap. Margin is your own money temporarily held. Confusing the two makes traders think higher leverage saves them money, which it does not.
Notional value versus the amount held
A position moves with its full notional value, not with the amount held. One standard lot of EUR/USD at 1.08500 carries a notional value of 108,500 dollars, and the margin held against it at 1:100 leverage is just 1,085 dollars. When price moves one percent you gain or lose 1,085 dollars, which is one hundred percent of the amount held. That is the gap that surprises beginners: risk is measured against notional value, not against margin.
Worked example: one lot at 1:100
Take one standard lot of EUR/USD at 1.08500 with 1:100 leverage on a 10,000 dollar balance. Notional value is 100,000 × 1.00 × 1.08500 = 108,500 dollars, and required margin is 108,500 ÷ 100 = 1,085 dollars. Equity is 10,000 dollars while there is no floating profit or loss, so free margin is 8,915 dollars and the margin level is 10,000 ÷ 1,085 × 100 = 921.66%. That is the default case shown above.
From leverage to margin percentage and back
The relation between leverage and margin percentage is purely inverse: the percentage equals one hundred divided by the leverage. A ratio of 1:100 means a 1% margin, 1:30 means 3.33%, 1:500 means 0.20%, and 1:1 means 100%, that is paying the full value. OANDA documentation states it plainly: leverage is the reciprocal of margin, and a 5% margin is the same as 20:1 leverage. Nothing in this relation concerns risk; it is simple inverse proportion.
Worked example: the same trade at 1:30
Now take exactly the same trade at 1:30 instead of 1:100. Notional value has not changed: 108,500 dollars. But required margin becomes 108,500 ÷ 30 = 3,616.67 dollars instead of 1,085, and the margin percentage becomes 3.33% instead of 1%. Free margin falls to 6,383.33 dollars and the margin level falls to 276.50%. Note what did not change: your risk on this trade is exactly the same, because its size did not change. What changed is how much of your balance was frozen.
Margin level and what it actually measures
The margin level is a percentage measuring equity against used margin. It is not a profitability measure and not a performance indicator: it measures distance from forced liquidation. It rises when you deposit funds, when a position moves into floating profit, or when you close part of your exposure; it falls when floating losses accumulate or when you add size. A high number does not mean you are trading well, only that you are far from a margin call at this moment. You can also turn that floating loss into a cash figure.
Margin call and stop out
Margin call and stop out are thresholds set by your broker, not by law, and there is no single standard value. We observed: ThinkMarkets at 100% and 50%, Pepperstone on MT4 and MT5 at 90% and 50%, FOREX.com at 100% and 50%, and IG citing 100% for the call. One important caution: OANDA inverts the direction entirely — its margin close-out percentage rises as the account deteriorates, the opposite of the margin level in MT4 and MT5. Do not mix the two conventions.
Worked example: an account near stop out
Take a 10,000 dollar balance with five lots open on EUR/USD at 1.08500 carrying a floating loss of 4,800 dollars. Required margin is 5,425 dollars and equity is 5,200 dollars, so free margin is minus 225 dollars and the margin level is 95.85%. That sits below the 100% margin call threshold and above the 50% stop out threshold, meaning the account cannot open new positions and stands 2,487.50 dollars of further loss away from forced liquidation.
Common mistakes
Four mistakes recur. The first is treating margin as a cost when it is collateral that comes back. The second is assuming higher leverage means higher risk in itself: leverage sets what is held, and position size alone sets risk. The third is ignoring that metals contract sizes differ radically from forex, which throws the margin figure out by orders of magnitude. The fourth is assuming the call and stop out thresholds are standard, when we have seen them vary between brokers and between two account types at the same broker.
Frequently asked questions
What is the difference between required margin and margin level?
Required margin is a cash amount in your account currency — what the broker holds to open the position. Margin level is a percentage comparing your equity to that held amount. The first stays fixed while the position keeps its size; the second moves with every price change because equity moves.
Why does the calculator ask me for the margin call level instead of using a standard value?
Because there is no standard value. ThinkMarkets publishes a call at 100% and a stop out at 50%, while Pepperstone publishes a call at 90% and a stop out at 50% for retail clients. MetaQuotes’ own documentation defines both levels as broker-set properties rather than constants. Any number we hardcoded would be wrong for some users.
Is the loss-remaining-before-margin-call figure accurate?
It is a derived estimate, not a published industry formula. We checked MetaTrader and MQL5 documentation and the BabyPips, ThinkMarkets, FOREX.com and IG pages, and none publishes a generalized formula for this distance — only numerical examples. We derived it from the confirmed margin level and equity formulas, and we say so directly beneath the figure. It also assumes the held margin stays constant as price moves, which some platforms recalculate.
Why does the margin here differ from what my platform shows?
Three common causes. First, the reference sources disagree on the formula itself: MetaQuotes computes margin in the base currency without the instrument price and then converts, while brokers multiply price by size and divide by leverage. Second, the contract size may differ from the default, especially on metals. Third, some brokers apply an additional margin factor to specific instruments or to large positions.
Does higher leverage mean higher risk?
Leverage itself does not set your risk; position size does. What higher leverage does is let you open a larger position for the same held amount. If you use it to increase size, risk rises. If size stays the same, only the held margin falls and free margin rises. The figure that measures your real exposure is notional value against your equity, not the headline leverage ratio.
Does this calculator tell me a safe position size?
No. It shows the consequences of a size you entered; it recommends no size, no leverage and no timing. The distance remaining before a stop out is descriptive information that helps you read your account’s state, not a signal that a position is suitable. Sizing starts from how much you are prepared to lose, which is what the position size calculator does.