🛡️ Risk & Money·beginner

Used Margin

Also called: margin used, required margin

The amount of your account equity locked up as collateral for open positions — can't be used for new trades until positions close.

Used margin is the cash that's currently locked up as collateral for your open positions. It's calculated based on your leverage and your position sizes. At 1:100 leverage, opening a 1-lot EUR/USD position uses about $1,000 in margin. That $1,000 is locked until you close the trade. Used margin doesn't represent risk. It's just collateral. The actual risk is determined by your stop loss distance — used margin is what the broker sets aside to make sure you can cover your trade. The two numbers are independent. As you add more positions, used margin grows and free margin shrinks. When used margin gets too high relative to equity, you're at risk of a margin call. The relationship is captured in the margin level percentage.

Real trade example

Many retail traders blew up in 2020 by stacking 5-10 positions on the same direction during the COVID crash. Each position looked small individually, but total used margin hit 80%+ of equity — and a normal drawdown wiped them out.

Related terms

Free Margin

beginner

The portion of your account equity that's NOT being used as margin for open trades — what's available to open new positions.

Margin

beginner

The amount of your own money locked up as collateral to open and hold a leveraged position.

Margin Level

intermediate

The ratio of your equity to your used margin, expressed as a percentage — the broker's measure of how close you are to a margin call.

Margin Call

beginner

The broker's warning (or automatic closeout) when your account loses too much and can no longer support your open trades.

Leverage

beginner

Borrowed money from your broker that lets you control a large position with a small deposit.

Sharpe Ratio

advanced

A risk-adjusted return metric that measures how much excess return you're getting per unit of risk — higher is better.

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