What are margin and free margin?
Quick answer
Margin is the amount of account equity set aside to hold open positions, based on their size and the account's leverage. Free margin is equity minus the margin in use: what remains available for new positions. If an order would need more margin than is free, it should be refused.
Detailed answer
Margin connects leverage to position size. With 1:100 leverage, a position worth $100,000 needs $1,000 of margin.
The calculation
Required margin = notional value ÷ leverage, where notional value = lots × contract size × price, converted into the account currency.
Worked example
A $10,000 account with 1:30 leverage buys 1 lot of EUR/USD at 1.08500. The notional value is 100,000 × 1.08500 = $108,500, so required margin is $108,500 ÷ 30 = $3,617. If equity is $10,000, free margin after the trade is $6,383. A second identical order would need another $3,617, which still fits; a third would not.
The margin level
Margin level = equity ÷ used margin × 100%. Platforms display it so traders can see how close they are to running out of margin.
Margin and prop rules
In prop accounts, loss limits normally end the account long before margin runs out. Margin still matters because it limits how large positions can be, which is why leverage is a rule-design decision.
PropExecutor checks margin on every order path, market and pending, against free margin recalculated at the moment of the order, and refuses orders that would exceed it. Leverage is set per account, and rules can cap effective leverage overall or by asset class.
PropExecutor team · Updated
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