# Margin and Leverage Calculator > Free margin and leverage calculator. Enter your equity, position value and margin rate to see required margin, free margin, leverage and the move that wipes you out. Source: https://learn.tradelabsai.com/tools/margin-and-leverage-calculator/ Track: Calculators · Level: Beginner · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Margin and Leverage Calculator", https://learn.tradelabsai.com/tools/margin-and-leverage-calculator/ Margin lets you control a position worth more than the money in your account. That is useful, and dangerous. This calculator shows the numbers that matter before you open a leveraged trade: how much margin the broker will hold, how much free margin is left, your effective leverage and, most importantly, how large a price move against you would wipe out your entire account. It applies to forex, CFDs, futures, crypto perpetuals and stock margin accounts, though each has its own rules on maintenance and liquidation. ## Calculator *Interactive calculator: use it at https://learn.tradelabsai.com/tools/margin-and-leverage-calculator/* ## How it works ``` Required margin = Position value × Margin requirement % Free margin = Equity - Required margin Effective leverage = Position value / Equity Move that wipes out equity = Equity / Position value ``` The margin requirement is what the broker demands, and it sets the maximum leverage. Effective leverage is what you actually use, and it is what determines how much a move hurts. See [Margin](https://learn.tradelabsai.com/markets/margin/) and [Leverage](https://learn.tradelabsai.com/markets/leverage/). **Example: Five times leverage** A trader with $10,000 opens a $50,000 position at a 5% margin requirement. The broker holds $2,500 as margin, leaving $7,500 free. Effective leverage is 5 times. A 1% move against the position costs $500, or 5% of equity. A 20% adverse move would cost $10,000, the entire account, and in practice the broker would close the position earlier, when equity falls below its maintenance level. The 5% margin rate would allow up to 20 times leverage, but using all of it would mean a 5% move wipes out the account. See [Risk of Ruin](https://learn.tradelabsai.com/risk/risk-of-ruin/). ## Margin requirement and maximum leverage | Margin requirement | Maximum leverage | Move that wipes out a fully leveraged account | |---|---|---| | 50% (US stocks, Reg T) | 2x | 50% | | 20% | 5x | 20% | | 10% | 10x | 10% | | 3.33% (EU retail major FX) | 30x | 3.33% | | 1% | 100x | 1% | EU and UK rules cap retail leverage on major currency pairs at 30 to 1 and lower on other products. See [CFD Trading](https://learn.tradelabsai.com/markets/cfd-trading/) and [Account Types and Margin Rules](https://learn.tradelabsai.com/industry/account-types-and-margin-rules/). ## Initial, maintenance and liquidation | Term | Meaning | |---|---| | Initial margin | Needed to open a position | | Maintenance margin | Minimum to keep it open | | Margin call | Request for more funds when equity falls below maintenance | | Liquidation or stop out | Broker closes positions automatically, often at a set margin level | Crypto exchanges liquidate positions automatically and can charge liquidation fees. See [Liquidations in Crypto](https://learn.tradelabsai.com/crypto/liquidations-in-crypto/) and [Futures Margin: Initial and Maintenance](https://learn.tradelabsai.com/futures/futures-margin/). ## How much leverage is sensible? A practical approach is to size positions by risk per trade, using stops, rather than by available margin. If you risk 1% per trade with a stop 2% away, the position is half your account, leverage of 0.5. Leverage then follows from your risk plan instead of driving it. See [Position Size Calculator](https://learn.tradelabsai.com/tools/position-size-calculator/). ## Common mistakes 1. **Treating margin as the risk:** the deposit is not the maximum loss. 2. **Using maximum leverage** because the broker allows it. 3. **Ignoring overnight and weekend gaps,** which can exceed equity on high leverage. 4. **Forgetting financing costs** on leveraged positions held overnight. See [Financing and Overnight Costs](https://learn.tradelabsai.com/orders/financing-and-overnight-costs/). 5. **Adding to losers** and raising leverage as equity falls. ## Checking before every leveraged trade Run these numbers before opening any leveraged position, not after. If the move that would wipe out your equity is smaller than a normal daily range for the market you trade, the position is too large regardless of what the broker permits. ## Frequently asked questions ### How do I calculate leverage? Divide the total value of your positions by your account equity; a $50,000 position on $10,000 of equity is 5 times leverage. ### What is free margin? Equity minus the margin held for open positions, the amount available for new positions or to absorb losses. ### What happens if my margin runs out? The broker issues a margin call or automatically closes positions when equity falls below the maintenance or stop out level. Next, measure whether your system has an edge with the [Expectancy and Profit Factor Calculator](https://learn.tradelabsai.com/tools/expectancy-calculator/). ## Continue learning - Next lesson: [Expectancy and Profit Factor Calculator](https://learn.tradelabsai.com/tools/expectancy-calculator/) - Previous lesson: [Futures Tick Value Calculator](https://learn.tradelabsai.com/tools/futures-tick-value-calculator/) - Related: [Futures Tick Value Calculator](https://learn.tradelabsai.com/tools/futures-tick-value-calculator/): Free futures tick value calculator. Pick a contract such as ES, MES, NQ, CL or GC, enter entry, exit and contracts, and see ticks and profit or loss. - Related: [Margin](https://learn.tradelabsai.com/markets/margin/): Margin is the deposit you put up to borrow money or open leveraged positions. Learn initial and maintenance margin, margin calls, interest and how to avoid them. - Related: [Leverage](https://learn.tradelabsai.com/markets/leverage/): Leverage lets you control a larger position with less money. Learn how leverage ratios work, how they magnify gains and losses and how to use leverage safely. - Related: [Leverage and Margin in Forex](https://learn.tradelabsai.com/forex/leverage-and-margin-in-forex/): Forex brokers offer high leverage through margin. Learn how margin is calculated, regulatory limits, margin calls and stop outs, and how to use leverage safely. - Related: [Account Types and Margin Rules](https://learn.tradelabsai.com/industry/account-types-and-margin-rules/): Cash, margin, portfolio margin and retirement accounts follow different rules. Learn Regulation T, maintenance margin, settlement and good faith violations. - Related: [Liquidations in Crypto](https://learn.tradelabsai.com/crypto/liquidations-in-crypto/): A liquidation is the forced closing of a leveraged crypto position when margin runs out. Learn how liquidation prices work, cascades, heatmaps and how to avoid them.