What is free margin and how is it calculated?
Free margin refers to the amount of equity in a trading account that is available for opening new positions. It’s the portion of your funds that is not tied up in existing trades, showing how much you can invest without risking your current positions. Monitoring your free margin is important for preventing margin calls or stop-outs and to ensure the effective management of your trading strategy.
To calculate free margin, you can use the following formula:
Free margin = equity - used margin
- Equity is the total funds of your account, including your deposits and any unrealized profits or losses from open positions.
- Used margin is the amount of margin currently allocated for your open positions.