Used margin is the portion of your trading account that a broker temporarily reserves to keep your leveraged positions open.
When you trade Forex, CFDs, or other leveraged instruments, you don’t pay the full value of a position. Instead, your broker requires a small amount of capital as collateral. This reserved amount is called used margin.
Although these funds remain part of your account, they cannot be used to open additional trades until the existing position is closed. Once the trade ends, the reserved funds become available again.
Understanding what used margin is is essential because it directly affects your available trading capital, your free margin, and ultimately your account’s ability to withstand market fluctuations.
If you are new to leveraged trading, you should first read our guide on What Is Margin in Trading? And what is free margin? As these concepts work together.
Quick Answer
Used margin is the amount of your account that a broker sets aside as collateral for open leveraged positions. It remains reserved while the trade is active and becomes available again after the position is closed.
Once you’ve mastered the basics of Used Margin, compare the Used Margin requirements offered by different platforms in our Best Forex Brokers guide, and you should take a look at the best brokers in 2026
Used Margin at a Glance
| Feature | Description |
|---|---|
| Definition | Funds reserved by the broker |
| Purpose | Keeps leveraged positions open |
| Changes When | Trades are opened or closed |
| Available for New Trades | No |
| Related To | Free Margin, Equity, Margin Level |
| Used In | Forex, CFDs, Commodities, Crypto |
Why Does Used Margin Matter?
Every leveraged trade requires collateral. Without it, brokers would have no financial protection against potential losses.
The amount reserved for your open positions directly influences how much capital remains available for future trades. As this reserved amount grows, the funds available to absorb losses or open additional positions become smaller.
This is why experienced traders monitor more than just profits and losses. They also pay close attention to how much of their account is already committed to existing trades.
Maintaining a healthy balance between reserved funds and available capital reduces the likelihood of margin calls and forced liquidations during periods of high market volatility.
How Does Used Margin Work?
Imagine you deposit $5,000 into your trading account.
You decide to open a EUR/USD position that requires $600 in collateral.
The moment your order is executed, the broker sets aside that $600 to support the position.
Your account now looks like this:
| Account Metric | Value |
|---|---|
| Balance | $5,000 |
| Equity | $5,000 |
| Reserved for Open Positions | $600 |
| Available Trading Funds | $4,400 |
Notice that your account balance has not changed.
The broker has simply allocated part of your funds to maintain the position. Once the trade is closed, those funds become fully available again.
How Is Used Margin Calculated?
The amount of used margin required for a trade depends on three main factors:
- The size of your position
- The leverage offered by your broker
- The margin requirement for the trading instrument
In most cases, trading platforms calculate the required amount automatically. However, understanding the calculation helps you estimate how much of your capital will be reserved before placing a trade.
Used Margin Formula
The simplest formula is:
Used Margin = Position Value ÷ Leverage
For example, if you open a position worth $20,000 with 1:100 leverage:
Used Margin = $20,000 ÷ 100 = $200
Your broker reserves $200 as collateral while the position remains open.
Note: Some brokers display this value as Required Margin instead of Used Margin. Both terms generally refer to the amount reserved to support an open leveraged position.
Used Margin Calculation Examples
Examples are the easiest way to understand how this concept works in real trading.
Example 1: Forex Trade
Sarah deposits $3,000 into her trading account.
She opens a EUR/USD position worth $30,000 using 1:100 leverage.
| Account Information | Value |
|---|---|
| Account Equity | $3,000 |
| Position Value | $30,000 |
| Leverage | 1:100 |
| Required Collateral | $300 |
After opening the trade:
| Account Metric | Value |
|---|---|
| Equity | $3,000 |
| Used Margin | $300 |
| Free Margin | $2,700 |
Although Sarah still owns the full account balance, $300 is temporarily reserved by the broker until the position is closed.
Example 2: Opening a Second Position
Sarah later opens another trade that requires $500 in collateral.
Her account now becomes:
| Account Metric | Value |
|---|---|
| Equity | $3,000 |
| Used Margin | $800 |
| Free Margin | $2,200 |
The second trade increases the amount reserved by the broker, leaving less capital available for new opportunities.
Example 3: Closing a Position
Sarah closes her first trade.
The broker immediately releases the collateral that was supporting that position.
| Account Metric | Value |
|---|---|
| Equity | $3,000* |
| Used Margin | $500 |
| Free Margin | $2,500* |
*Assuming there is no profit or loss for simplicity.
Closing positions reduces the reserved amount and restores your available trading funds.
Example 4: Floating Profit
Suppose Sarah’s remaining trade generates an unrealized profit of $400.
Her account changes as follows:
| Account Metric | Value |
|---|---|
| Balance | $3,000 |
| Equity | $3,400 |
| Used Margin | $500 |
| Free Margin | $2,900 |
Notice that the reserved amount does not change simply because the trade is profitable.
Instead, the increase in equity causes the free margin to rise.
Example 5: Floating Loss
Now imagine the same position moves against Sarah by $600.
| Account Metric | Value |
|---|---|
| Balance | $3,000 |
| Equity | $2,400 |
| Used Margin | $500 |
| Free Margin | $1,900 |
Again, the reserved amount remains the same.
Only the account equity changes as unrealized losses increase.
This is why many beginners mistakenly think their broker is increasing the required collateral, when in reality it is their available capital that is shrinking.
What Affects Used Margin?
The amount of used margin is not fixed. It changes whenever you open or close leveraged positions, and it also depends on your broker’s trading conditions.
Understanding these factors helps you manage your account more effectively.
Position Size
The size of your trade has the biggest impact on the amount reserved by your broker.
A larger position requires more collateral, while a smaller position requires less.
For example, a trade worth $100,000 requires significantly more reserved capital than a trade worth $10,000, even if both use the same leverage.
Leverage
Leverage determines how much capital you must commit to control a position.
Higher leverage reduces the amount of collateral required.
| Leverage | Position Value | Margin Required |
|---|---|---|
| 1:20 | $20,000 | $1,000 |
| 1:50 | $20,000 | $400 |
| 1:100 | $20,000 | $200 |
| 1:200 | $20,000 | $100 |
While higher leverage lowers the required collateral, it also increases overall trading risk because market movements have a larger impact on your account.
Number of Open Positions
Every additional trade requires extra collateral.
As you increase the number of open positions, the total amount reserved by your broker also increases.
This reduces the capital available for opening new trades or absorbing temporary market losses.
Trading Instrument
Not every financial market has the same margin requirement.
For example:
| Asset Class | Typical Margin Requirement |
|---|---|
| Major Forex Pairs | Low |
| Gold & Commodities | Medium |
| Stock CFDs | Medium to High |
| Cryptocurrency CFDs | High |
More volatile assets generally require a larger amount of collateral because they expose brokers to greater risk.
Broker’s Margin Policy
Every broker sets its own margin requirements.
Depending on the broker and the account type, the required collateral may differ even for the same financial instrument.
For this reason, always review your broker’s trading specifications before opening large leveraged positions.
Market Conditions
During periods of extreme market volatility or major economic events, some brokers temporarily increase margin requirements.
This means the same position may require more collateral than it would under normal market conditions.
Checking your broker’s announcements before high-impact events can help you avoid unexpected changes to your available trading capital.
Key Point
The amount reserved for your open positions is mainly influenced by:
- Position size
- Leverage
- Number of open trades
- Trading instrument
- Broker’s margin policy
- Current market conditions
Learning how these factors interact makes it easier to manage risk and maintain sufficient capital for future trading opportunities without placing unnecessary pressure on your account.
How Used Margin Changes During a Trade
Let’s follow a complete trading example.
Step 1: Before Opening a Trade
| Account Metric | Value |
|---|---|
| Balance | $8,000 |
| Equity | $8,000 |
| Used Margin | $0 |
| Free Margin | $8,000 |
Since there are no open positions, no margin has been reserved.
Step 2: Open Your First Position
Suppose your broker reserves $1,200.
Your account becomes:
| Account Metric | Value |
|---|---|
| Equity | $8,000 |
| Used Margin | $1,200 |
| Free Margin | $6,800 |
The used margin remains locked while the trade stays open.
Step 3: Open Another Position
The second trade requires $800 in margin.
Now your account looks like this:
| Account Metric | Value |
|---|---|
| Equity | $8,000 |
| Used Margin | $2,000 |
| Free Margin | $6,000 |
Notice that your used margin increased because another position was opened.
Step 4: Close One Position
After closing the first trade, the reserved margin is released.
| Account Metric | Value |
|---|---|
| Equity | $8,000 |
| Used Margin | $800 |
| Free Margin | $7,200 |
Closing positions immediately reduces used margin and increases your available free margin.
Used Margin vs Free Margin
The two terms are often confused because they both describe portions of your trading capital.
The difference is simple:
- Used margin is the amount reserved by your broker for your open positions.
- Free margin is the remaining capital available to open new trades or absorb floating losses.
Every time you open a leveraged trade, part of your equity is transferred from available funds to reserved collateral.
When you close a position, the process is reversed.
| Used Margin | Free Margin |
|---|---|
| Reserved by the broker | Available for trading |
| Supports existing positions | Supports future positions |
| Locked while trades remain open | Changes continuously with equity |
| Released after closing positions | Used to open additional trades |
Think of your trading account as a wallet.
- Used margin is the money you’ve already committed.
- Free margin is the money still available to spend.
Both are important because they determine how much flexibility your account has during changing market conditions.
Practical Example
Assume the following account:
| Account Metric | Value |
|---|---|
| Balance | $5,000 |
| Equity | $5,000 |
| Used Margin | $800 |
| Free Margin | $4,200 |
If you open another position requiring $500 in collateral:
| Account Metric | Before | After |
|---|---|---|
| Equity | $5,000 | $5,000 |
| Used Margin | $800 | $1,300 |
| Free Margin | $4,200 | $3,700 |
Notice that your equity stays the same.
Only the distribution of your funds changes.
How Used Margin Relates to Equity
Many beginners assume that equity and used margin are the same thing.
They are not.
Equity represents the real-time value of your trading account after including all floating profits and losses.
Used margin, on the other hand, is simply the portion of that equity reserved to maintain open positions.
This means:
- Equity changes whenever market prices move.
- Used margin usually changes only when positions are opened or closed, or when margin requirements are adjusted by the broker.
Because equity changes continuously while the reserved amount often remains unchanged, your available trading funds also change throughout the trading day.
Example: Floating Profit
Suppose your account looks like this:
| Account Metric | Value |
|---|---|
| Balance | $5,000 |
| Equity | $5,000 |
| Used Margin | $800 |
| Free Margin | $4,200 |
Your trade gains $600.
The account becomes:
| Account Metric | Value |
|---|---|
| Balance | $5,000 |
| Equity | $5,600 |
| Used Margin | $800 |
| Free Margin | $4,800 |
The broker has not increased the reserved collateral.
Instead, your higher equity creates additional available capital.
Example: Floating Loss
Now imagine the market moves against you by $900.
| Account Metric | Value |
|---|---|
| Balance | $5,000 |
| Equity | $4,100 |
| Used Margin | $800 |
| Free Margin | $3,300 |
Again, the reserved amount remains unchanged.
Only your account equity has fallen.
This is why traders should monitor equity throughout the trading session rather than focusing only on their account balance.
How Used Margin Relates to Margin Level
Another important metric is margin level.
It measures how much equity your account has compared with the amount currently reserved for open positions.
A higher margin level generally indicates a stronger account, while a lower margin level suggests that your account is approaching higher risk.
The standard formula is:
Margin Level (%) = (Equity ÷ Used Margin) × 100
For example:
| Account Metric | Value |
|---|---|
| Equity | $4,000 |
| Used Margin | $1,000 |
Margin Level:
(4,000 ÷ 1,000) × 100 = 400%
A 400% margin level means your account has four times more equity than the amount currently reserved.
Why Margin Level Changes
Margin level changes whenever either of these values changes:
- Equity increases or decreases.
- Used margin increases or decreases.
For example:
| Event | Margin Level |
|---|---|
| Floating profit increases | Usually rises |
| Floating loss increases | Usually falls |
| Opening another trade | Usually falls |
| Closing a position | Usually rises |
| Depositing more funds | Usually rises |
This is why experienced traders monitor margin level instead of looking only at the account balance.
It provides a clearer picture of how much risk the account is currently carrying.
Putting Everything Together
The following table shows how these four metrics work together.
| Metric | What It Represents | Changes When |
|---|---|---|
| Balance | Money after closed trades | Trades close or deposits/withdrawals occur |
| Equity | Real-time account value | Prices move |
| Used Margin | Funds reserved for open positions | Positions open or close |
| Free Margin | Available trading capital | Equity or reserved funds change |
| Margin Level | Overall account health | Equity or reserved funds change |
Each metric serves a different purpose, but together they help traders understand the financial condition of their trading account.
Ignoring any one of them can lead to poor risk management decisions.
A Simple Way to Remember
If you’re new to leveraged trading, remember these four concepts:
- Balance tells you how much money you own after closed trades.
- Equity shows what your account is worth right now.
- Used Margin is the collateral currently supporting open positions.
- Free Margin is the capital still available.
- Margin Level measures the overall safety of your account.
Understanding how these values interact makes it much easier to manage leverage responsibly, avoid unnecessary margin calls, and maintain a healthier trading account over the long term.
Common Used Margin Mistakes
Many beginner traders understand the definition of used margin, yet they still misuse it in practice. These mistakes often reduce account flexibility, increase risk, and make margin calls more likely.
Here are the most common mistakes—and how to avoid them.
Opening Positions That Are Too Large
One of the biggest mistakes is opening positions based on the maximum leverage available instead of a sensible risk level.
Although your broker may allow you to control a much larger position, doing so reserves more collateral and leaves less capital available if the market moves against you.
Better approach: Calculate your position size based on your risk management plan, not on the maximum buying power your broker offers.
Ignoring Available Trading Capital
Some traders focus only on their account balance and overlook how much capital is still available.
As additional positions are opened, more funds become reserved, reducing the account’s flexibility.
Before placing a new trade, always check whether you still have enough available capital to handle normal market volatility.
Overusing Leverage
Higher leverage lowers the collateral required for each trade, but it also increases the speed at which losses can accumulate.
This often encourages traders to open positions that are larger than their account can comfortably support.
Leverage should be viewed as a tool—not an invitation to increase exposure unnecessarily.
Opening Too Many Trades at Once
Several small positions can consume a significant portion of your available capital when combined.
While each trade may seem manageable on its own, the total exposure can leave very little room for unexpected market movements.
Diversification is useful, but opening too many positions simultaneously can increase overall account risk.
Confusing Reserved Funds With Trading Costs
A common misconception is that the broker deducts this amount as a fee.
In reality, these funds remain part of your account.
They are simply held as collateral while your positions remain open and become available again once those positions are closed.
Ignoring Changes in Margin Requirements
During periods of high volatility, some brokers temporarily increase margin requirements.
Traders who fail to monitor these changes may discover that existing positions require more collateral than expected.
Always review broker notifications before major economic announcements or highly volatile market sessions.
Focusing Only on Balance
Your account balance changes only after trades are closed.
However, your account’s real financial condition depends on equity, available capital, and the amount currently reserved for open positions.
Monitoring all account metrics provides a much clearer picture than watching the balance alone.
Best Practices for Managing Margin Allocation
Managing used margin effectively is not about keeping it as low as possible. Instead, the goal is to maintain enough available capital to support your trading strategy while controlling risk.
The following best practices can help you achieve that balance.
Use Appropriate Position Sizes
Every trade should begin with a position size that matches your account size and risk tolerance.
Professional traders determine their position size first, then calculate the required collateral—not the other way around.
This approach helps prevent excessive exposure and supports consistent long-term performance.
Leave a Healthy Safety Buffer
Avoid committing most of your account to open positions.
Leaving a comfortable amount of available capital provides flexibility during periods of increased volatility and reduces the likelihood of margin calls.
Many experienced traders prefer to keep a significant portion of their equity uncommitted rather than using every available dollar.
Monitor Your Account Metrics Regularly
Successful traders monitor several account metrics together:
- Equity
- Used Margin
- Free Margin
- Margin Level
Reviewing these values before opening additional positions helps you understand your current exposure and overall account health.
Use Leverage Conservatively
High leverage can reduce the initial collateral required, but it also magnifies potential losses.
Choosing moderate leverage often leads to more stable account performance and better risk control over the long term.
Diversify Without Overexposing Your Account
Holding positions across different markets can reduce concentration risk.
However, diversification should not result in excessive total exposure.
Evaluate your combined risk rather than looking at each trade in isolation.
Review Broker Requirements Before Trading
Margin requirements vary between brokers and asset classes.
Before opening a position, check:
- Minimum margin requirement
- Available leverage
- Margin call level
- Stop-out level
Understanding these conditions helps you avoid unexpected restrictions during active market sessions.
Plan Every Trade Before Entering the Market
A well-prepared trade includes more than just an entry price.
Before placing an order, ask yourself:
- Is the position size appropriate?
- Will enough capital remain available afterward?
- Can the account withstand normal market fluctuations?
- Does this trade fit within my overall risk management plan?
Answering these questions before entering the market often prevents costly mistakes later.
Key Takeaway
Managing used margin is about maintaining flexibility, not maximizing leverage.
Traders who control position sizes, monitor their account metrics, and keep sufficient available capital are generally better prepared to handle changing market conditions and reduce the risk of forced liquidations.
FAQ
Used margin is the portion of your account that a broker reserves as collateral to keep your leveraged positions open.
Not necessarily. Higher leverage reduces the required margin but also increases trading risk and potential losses.
Yes. It increases when you open new positions and decreases when positions are closed. It may also change if your broker adjusts margin requirements.
No. It is not a fee or a charge. The funds remain in your account and become available again after the position is closed.
No. Funds reserved as used margin cannot be withdrawn while they are supporting open positions.
The reserved funds are released immediately and become available for new trades or withdrawals.
You can reduce it by closing positions, opening smaller trades, or using lower overall market exposure.
Final Thoughts
Understanding what used margin is is essential for anyone trading with leverage. Although it is often viewed as a technical trading metric, it plays a central role in risk management and account stability.
Instead of thinking of used margin as money that has been taken from your account, consider it a temporary allocation of capital that allows your broker to support your open positions. As long as those positions remain active, the reserved funds cannot be used elsewhere. Once the trades are closed, the capital becomes available again.
Successful traders do not focus on used margin alone. They evaluate it alongside equity, free margin, and margin level to understand the overall health of their trading account. Monitoring these metrics together helps prevent overexposure, reduces the likelihood of margin calls, and encourages more disciplined trading decisions.
Whether you trade Forex, CFDs, commodities, or cryptocurrencies, learning how margin works is a fundamental step toward becoming a more confident and responsible trader.
Continue Learning
To better understand how used margin fits into leveraged trading, continue with these related guides:
Margin & Leverage
- What Is Margin in Trading?
- What Is Free Margin?
- Free Margin vs Used Margin
- What Is Margin Level?
- How to Calculate Margin Level
- What Is a Margin Call?
- What Is a Stop-Out Level?
- What Is Leverage in Trading?
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- What Is Binary Options Trading?
- What Is Forex Trading
- How to Start Forex Trading
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