Margin is the deposit your broker locks as collateral when you open a leveraged position. It is not a fee — you get it back when the trade closes — but while a position is open, that portion of your balance is spoken for.
The four numbers on your platform
- Balance — cash before open positions.
- Equity — balance plus or minus floating profit/loss.
- Used margin — collateral locked by open positions.
- Free margin — equity minus used margin: your remaining buffer.
Margin level = equity ÷ used margin × 100%. Brokers warn around 100% and force-close positions around 20–50% — the margin call, or more precisely the stop-out.
The anatomy of a blow-up
It is almost never one trade. The sequence: an oversized position → floating loss grows → free margin shrinks → the trader adds another position to "average down" → used margin rises exactly as equity falls → margin level collapses → the broker liquidates everything at the worst prices of the day.
Why disciplined traders never see one
Size every position from stop distance and a 1% risk cap, and your used margin stays a small fraction of equity. Even a maximum losing streak dents the account instead of detonating it. A margin call is not bad luck; it is a sizing decision reaching its logical conclusion. See Leverage Explained for the other half of this picture.
Education only — not financial advice. Trading carries risk of loss; never trade money you cannot afford to lose.
