Free Margin
Free margin is the equity not locked by open positions - the amount available to open new trades or absorb losses.
Free margin is equity not locked by open positions, available for new trades and to absorb losses. When it runs out, you cannot open positions and stop-out is near.
Free margin is the portion of account equity not tied up as margin by open positions. It is the buffer that absorbs floating losses before a margin call, and the amount available to open new positions. Free margin falls as positions move against you and as you open new trades. When free margin hits zero, you cannot open further positions, and if margin level keeps falling to the stop-out point, the broker closes positions.
How It Works
- Free margin = equity - used margin
- Shrinks with floating losses and new positions
- Zero free margin blocks new orders
Trading Tips
Keep free margin for the worst-case move, not just the current price
Opening to the maximum margin is the fastest route to a stop-out
Free margin is per-account: hedging across pairs still consumes it
Free Margin Example
Say your $5,000 account holds positions using $1,000 margin with $500 floating profit. Free margin reads $4,500: room for new trades plus buffer against adverse moves. A $4,000 slide against you erases it and starts the margin-call sequence.
How Traders Use Free Margin
Keep free margin abundant enough that normal noise never touches it. Open new risk only from surplus, and treat shrinking free margin as an early warning to reduce, not a challenge to endure.
Related Terms
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