How do you calculate the margin on a forex trade?

Margin is the collateral your broker holds to keep a position open — the trade's notional value divided by your leverage ratio. It's not a fee: it's set aside and returned when you close. Higher leverage means less margin, but the same large exposure.

What is forex margin, and why is it required?

Margin is the slice of your capital a broker reserves when you open a leveraged position — a security deposit that lets you control a position far larger than your balance. It isn't a cost; it stays part of your equity and is released when the trade closes. Brokers require it to cover small adverse moves without you defaulting.

How do you calculate it?

You need the notional value and the leverage ratio:

Margin Required = Notional Value ÷ Leverage

Notional Value = Units of Base Currency × Rate to your account currency

Worked example (illustrative):

• USD account, buy 1 standard lot (100,000) EUR/USD at 1.0850, leverage 1:500
• Notional = 100,000 × 1.0850 = $108,500
• Margin = $108,500 ÷ 500 = $217

At 1:100 instead, the same trade needs $108,500 ÷ 100 = $1,085. Forex Command's MRS (Market Readiness Score) can inform your conviction, but the margin itself follows only leverage and notional.

What's the biggest beginner mistake?

Confusing a low margin with low risk. Controlling $108,500 with $217 feels safe, but the risk lives in the notional, not the margin — every pip moves real money against your equity. Stack several such positions and a small move can trigger a margin call. Weigh the exposure, not the deposit; Forex Command's CTS (Carry Trade Score) helps judge a pair's risk/reward before you lever up.