Free Margin is a display of the current value of your trading account. It is necessary to open a trading position to a collateral or a financial instrument. Mathematically, this is the algebraic amount of the account balance and the variable profit/loss. This means that free margin is just the difference between the capital and the margin used.
Used margin is the margin amount required for all open positions. The margin used is a locked value that cannot be used to induance a transaction. The free margin specifies the amount that can be used to open new positions.
Free margin is also known for its affordable margin, useful margin and useful supported margin. It increases or decreases depending on the total profit made by the trader or the losses received.
How to calculate the margin without deposit
As mentioned, the free margin is the arithmetic difference between the capital and the margin used. For example, free margins – capital – used margin.
Note: If you have an open position, the free margin increases or decreases depending on how your trade works.
Funds are calculated using floating gains and losses that change with each pip. Thus, as the variable profit increases, so does equity, which in turn also increases free margins. Similarly, variable loss reduces the value of capital, which reduces free margins.
m than calculations
There are two cases that we may consider to calculate free margin. When there are no open positions and when there are free positions.
If you do not have open trades, the free margin will be the same as the balance and capital.
Let’s consider what would happen to the free margin if you open a long position of $10,000/CAD units. Let’s say the margin required is $200 and your account is between $1,000 and $101,001,101,000. Assuming you are operating at a profit of $50, your equity can be calculated as follows: way: funds are account balances, variable profit/loss is $1,000 and $50. Equity is $1,050.
Margin used. Since there is only one item used margin will be the same as the required margin. Therefore, the margin used will be $200.
Therefore, the free margin – capital – used margin – 1050-200 dollars , 850 U.S. dollars.