Margin and Leverage Explained, With Worked Examples

Leverage lets you open a trade much bigger than the money in your account. Margin is the part of your money the trade holds while it is open. Both are simple once you see the numbers.

What is margin?

Margin is the money your broker sets aside to keep a trade open. It is a deposit, not a fee.

The Exness Help Center defines it as "the amount of funds a broker withholds to open and keep an order open" (checked 3 Nov 2026).

When you close the trade, the margin is free again. Your balance then changes only by the profit or loss and any costs.

See margin in our glossary.

What is leverage?

Leverage is the ratio between the trade size and the margin it needs. At 1:100, a trade needs margin of one hundredth of its size.

Exness puts it this way: leverage "impacts the margin held when an order is opened".

Leverage does not change what a pip is worth. It only changes how much margin you need, and so how big a trade you can open.

How do I calculate margin?

For forex, margin = trade size ÷ leverage. Trade size is lots × contract size, and you convert it to your account currency.

US rules express the same idea as a percentage. The NFA requires a security deposit of "Two percent of the notional value" for major currencies. Two percent is the same as 1:50.

Hypothetical example: you buy 0.10 lot of EUR/USD at a made-up price of 1.1000, in a USD account.

• Trade size: 0.10 × 100,000 = 10,000 EUR.
• In USD: 10,000 × 1.1000 = 11,000 USD.

For USD/JPY the base currency is USD, so no conversion is needed. 0.10 lot at 1:100 needs 10,000 ÷ 100 = 100 USD.

The margin calculator does this with your broker's contract sizes. Your trading terminal shows the exact figure.

What are equity, free margin and margin level?

These three numbers tell you how much room your account has. Exness defines them in its Help Center:

• Equity = balance plus or minus floating profit or loss and swaps.
• Free margin is the money "not held and are free to use for new orders".
• Margin level = (equity ÷ margin) × 100.

Hypothetical example: your balance is 500 USD. You open the 0.10 lot trade above at 1:100, so margin is 110 USD. The trade is now 100 USD in loss.

• Equity: 500 − 100 = 400 USD.
• Free margin: 400 − 110 = 290 USD.
• Margin level: 400 ÷ 110 × 100 = about 363.6%.

What happens when margin runs low?

When your margin level falls far enough, the broker warns you and then closes trades. The warning is a margin call, and the forced close is a stop out.

Exness describes a margin call as an alert "warning that it may be necessary to deposit funds". It describes stop out as "the automatic closing of orders" when the margin level reaches the stop out level.

Levels differ by broker and account type. Check yours before you trade.

Does higher leverage mean more risk?

Higher leverage lets you open bigger trades, and bigger trades lose more per pip. The CFTC warns that "This high degree of leverage amplifies both gains and losses".

Hypothetical example, with a 500 USD balance and a 50-pip move against you on EUR/USD:

• 0.10 lot: one pip is 1 USD, so you lose 50 USD, or 10% of the balance.
• 1 lot: one pip is 10 USD, so the move costs 500 USD, the whole balance. A stop out closes the trade when the margin level falls to the broker's stop out level, which can be at or near that point.

At 1:500, that 1 lot trade needs only 220 USD margin. The leverage made it possible to open. It did not make it safer.

Choose the trade size from the loss you can accept. Our lot size calculator helps, and What is a lot? explains the units.

Why do leverage limits differ by country and broker?

Leverage limits are set by regulators, so they depend on where you live and which company holds your account. Official examples, checked 3 Nov 2026:

ESMA also set 20:1 for non-major pairs, gold and major indices, and 2:1 for crypto. The NFA requires 5% for other currencies, which equals 1:20.

A broker can run several companies under different regulators. For example, Kenya's Capital Markets Authority lists Tadenex Limited, trading as Exness, among its licensees. The entity that holds your account decides your limits.

So the leverage in an advert may not apply to you. Check the leverage shown in your own account settings. Our Exness page also lists the countries where using Exness is limited, or says this is still being verified.

What else do beginners ask about margin?

Is margin a fee? No. It is held while the trade is open and freed when you close it. Costs are the spread, commission and swap.

Does leverage change my rebate? No. A rebate follows your trades and the broker's partner terms, not your leverage. See How it works.

Can I lose more than my deposit? The CFTC notes that traders may owe more than their initial deposit in some cases. ESMA's 2018 measures included negative balance protection for retail clients. Read our risk disclosure.

What is the short version?

Margin = trade size ÷ leverage. It is a deposit, not a fee. Leverage changes the margin you need, not what a pip is worth.

Leverage limits depend on your regulator and broker entity. Before each trade, check the margin in the margin calculator and size the trade by the loss you can accept.