Free margin represents the amount of funds in your trading account that is still available to open new positions. It's the portion of your equity that’s not currently used to maintain existing trades, essentially, your available capital.
Why Free Margin Matters
Monitoring your free margin is critical for maintaining control over your account. If your free margin drops too low, you may not be able to open new trades or maintain current ones, potentially triggering a margin call or even a stop-out.
How to Calculate Free Margin
The formula is simple:
Free Margin = Equity – Used Margin
Equity
includes your account balance plus any unrealized profit or loss from open trades.
Used Margin
is the capital locked in to support your open positions.
For example, if your equity is $2,000 and your used margin is $500, your free margin would be:
$2,000 – $500 = $1,500