Free Margin – Your free margin represents your total equity minus any margin used for leveraged trades. For example, if your equity is $1,000 and your used margin is $100, your free margin would amount to $900. Following your free margin is extremely important, as it is used to withstand negative price fluctuations from your open trades and to open new leveraged trades. It’s important to understand that your free margin increases with profitable positions, but decreases with your losing positions. Once the free margin drops to zero or below, your broker will activate the so-called margin call and close all your open positions at the current market rate, in order to prevent your equity from falling below the required margin.
Trading on margin is extremely popular among retail Forex traders. It allows you to open a much larger position than your initial trading account would otherwise allow, by allocating only a small portion of your trading account as the margin, or collateral for the trade. Trading on margin also carries certain risks, as both your profits and losses are magnified.

Interactive Brokers ®, IBSM, InteractiveBrokers.com ®, Interactive Analytics ®, IB Options AnalyticsSM, IB SmartRoutingSM, PortfolioAnalyst ®, IB Trader WorkstationSM and One World, One AccountSM are service marks and/or trademarks of Interactive Brokers LLC. Supporting documentation for any claims and statistical information will be provided upon request. Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.
Trading on a margin can have varying consequences. It can influence your trading experience both positively and negatively, with both profits and losses potentially being seriously augmented. Your broker takes your margin deposit and then pools it with someone else's margin Forex deposits. Brokers do this in order to be able to place trades within the whole interbank network.
×