Margin Requirement
Also known as: initial margin, required margin, margin rate, deposit requirement
What is it?
Margin requirement is the portion of a position's full value that your broker reserves as collateral before the position can be opened. One standard lot of EUR/USD at 1.0850 is about $108,500 of exposure. At the 1:30 leverage cap common for retail forex the requirement is roughly $3,617; at 1:500 it is about $217.
| One standard lot of EUR/USD | At 1:30 leverage | At 1:500 leverage |
|---|---|---|
| Exposure you actually control | $108,500 | $108,500 |
| Margin reserved to open it | $3,617 | $217 |
| What one pip is worth | $10.00 | $10.00 |
| Loss if price moves 50 pips against you | -$500 | -$500 |
| Free margin left on a $5,000 account | $1,383 | $4,783 |
| What that free margin tends to invite | Room for this one position to breathe | Room to open four more just like it |
Those two accounts hold the identical position: the same $108,500 of exposure, the same $10 for every pip, the same $500 loss if price moves 50 pips against them. Only the reserved collateral changed. That is the point most often missed.
Margin is not a fee and it is not the cost of the trade - it is your own money, ring-fenced while the position is open and released when it closes. What a lower requirement changes is how much of your equity stays free, and free margin is precisely the buffer that absorbs a losing trade before your broker starts closing positions for you.
Why it matters: Margin is the collateral reserved to open a position, not its cost - and the less that is reserved, the less of your equity is left to absorb the trade going against you.
Required margin = (position size x price) / leverage
It sets how much of your equity stays free, which decides how far price can move against you before a margin call.
Real-world example
One standard lot of EUR/USD at 1.0850 is about $108,500 of exposure: roughly $3,617 of margin at 1:30 leverage or $217 at 1:500 - and $10 a pip either way.
How SignalBots handles it
SignalBots states a stop-loss on every signal, so you can size the position against the loss you are willing to take rather than against the margin your broker happens to require. See /risk-warning.
Pro tip
Size from your stop-loss distance first and check the margin second. A position that fits your margin but not your risk budget is still too big.
Common pitfalls
Reading a low margin requirement as a low-risk position. Risk is set by the full notional value, which leverage does not shrink by a single dollar.
Frequently asked questions
Is margin a fee I pay to the broker?
No. It is your own money, held as collateral while the position is open and returned to your free balance the moment it closes. The actual costs of the trade are the spread, any commission and any overnight financing.
What is the difference between initial and maintenance margin?
Initial margin is what you need to open the position. Maintenance margin is the lower level your equity must stay above to keep it open. Falling between the two is what triggers a margin call rather than an immediate close.
Why did my broker raise the margin on a position I already hold?
Requirements track volatility and event risk, so they are commonly raised before elections, central bank decisions and weekends. The increase applies to open positions too, which can stretch a comfortable account without you trading at all.
Does higher leverage mean higher risk?
Not by itself - leverage does not change the exposure of a given position size. It becomes risk when the freed-up margin is used to open larger or additional positions, which is what usually happens in practice.
How do I work out the margin before opening a trade?
Multiply the position size by the current price to get the notional value, then divide by the leverage ratio. For half a lot of EUR/USD at 1.0850 on 1:30, that is $54,250 divided by 30, or about $1,808.
Trading involves substantial risk of loss. Historical and backtested results do not guarantee future performance. Read the full risk warning.
