What does \u201cFree Margin\u201d mean?<\/p>\n\n\n\n
Margin can be classified as either \u201cused\u201d or \u201cfree\u201d.<\/p>\n\n\n\n
Used Margin<\/strong>, which is just the aggregate<\/em> of all the Required Margin<\/strong> from all open positions, was discussed in a previous lesson.<\/p>\n\n\n\n Free Margin<\/strong> is the difference<\/em> between Equity and Used Margin.<\/p>\n\n\n\n Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in margin for current open positions.<\/p>\n\n\n\n Free Margin is also known as \u201cUsable Margin<\/strong>\u201d because it\u2019s margin that you can \u201cuse\u201d\u2026.it\u2019s \u201cusable\u201d.<\/p>\n\n\n\n Free Margin can be thought of as two things:<\/p>\n\n\n\n Don\u2019t worry about what a Margin Call and Stop Out are. They will be discussed later.<\/p>\n\n\n\n For now, just know they\u2019re bad things. Like acne breakouts, you don\u2019t want to experience them.<\/p>\n\n\n\n Free Margin<\/strong> is also known as Usable Margin<\/strong>, Usable Maintenance Margin<\/strong>, Available Margin<\/strong>, and \u201cAvailable to Trade<\/strong>\u201c.<\/p><\/blockquote>\n\n\n\n Here\u2019s how to calculate Free Margin:<\/p>\n\n\n\n If you have open positions, and they are currently profitable, your Equity will increase, which means that you will have more Free Margin as well.<\/p>\n\n\n\n Floating profits increase Equity, which increases Free Margin. <\/strong><\/p>\n\n\n\n If your open positions are losing money, your Equity will decrease, which means that you will also have less Free Margin as well.<\/p>\n\n\n\n Floating losses decrease Equity, which decreases Free Margin. <\/strong><\/p>\n\n\n\n Let\u2019s start with an easy example.<\/p>\n\n\n\n You deposit $1,000 in your trading account.<\/p>\n\n\n\n You don\u2019t have any open positions, what is your Free Margin?<\/p>\n\n\n\n If you don\u2019t have any open position, calculating the Equity is easy.<\/p>\n\n\n\n The Equity would be the SAME as your Balance.<\/p>\n\n\n\n Since you don\u2019t have any open positions, you don\u2019t have any floating profits or losses<\/strong>.<\/a><\/p>\n\n\n\n If you don\u2019t have any open positions, then the Free Margin is the SAME as the Equity.<\/p>\n\n\n\n Since you don\u2019t have any open positions, there is no margin being \u201cused\u201d<\/strong>.<\/p>\n\n\n\n This means that your Free Margin will be the same as your Balance and Equity.<\/a><\/p>\n\n\n\n Now let\u2019s make it a bit more complicated by entering a trade!<\/p>\n\n\n\n Let\u2019s say you have an account balance of $1,000.<\/a><\/p>\n\n\n\n You want to go long USD\/JPY and want to open 1 mini lot (10,000 units) position. The Margin Requirement is 4%<\/strong>.<\/p>\n\n\n\n How much margin (Required Margin) will you need to open the position?<\/p>\n\n\n\n Since USD is the base currency. this mini lot is 10,000 dollars, which means the position\u2019s Notional Value is $10,000.<\/p>\n\n\n\n Assuming your trading account is denominated in USD, since the Margin Requirement is 4%<\/strong>, the Required Margin will be $400<\/strong>.<\/a><\/p>\n\n\n\n Aside from the trade we just entered, there aren\u2019t any other trades open.<\/p>\n\n\n\n Since we just have a SINGLE position open, the Used Margin will be the same as Required Margin.<\/a><\/p>\n\n\n\n Let\u2019s assume that the price has moved slightly in your favor and your position is now trading at breakeven.<\/p>\n\n\n\n This means that your floating P\/L is $0<\/strong>.<\/p>\n\n\n\n Let\u2019s calculate your Equity:<\/p>\n\n\n\n The Equity in your account is now $1,000<\/strong>.<\/a><\/p>\n\n\n\n Now that we know the Equity, we can now calculate the Free Margin:<\/p>\n\n\n\nHow to Calculate Free Margin<\/h2>\n\n\n\n
Free Margin = Equity - Used Margin<\/pre>\n\n\n\n
Example: No Open Positions<\/h2>\n\n\n\n
Step 1: Calculate Equity<\/h3>\n\n\n\n
Equity = Account Balance + Floating Profits (or Losses)\n\n$1,000 = $1,000 + $0<\/pre>\n\n\n\n
Step 2: Calculate Free Margin<\/h3>\n\n\n\n
Free Margin = Equity - Used Margin\n\n$1,000 = $1,000 - $0<\/pre>\n\n\n\n
Example: Open a Long USD\/JPY Position<\/h2>\n\n\n\n
Step 1: Calculate Required Margin<\/h3>\n\n\n\n
Required Margin = Notional Value x Margin Requirement\n\n$400 = $10,000 x .04<\/pre>\n\n\n\n
Step 2: Calculate Used Margin<\/h3>\n\n\n\n
Step 3: Calculate Equity<\/h3>\n\n\n\n
Equity = Account Balance + Floating Profits (or Losses)\n\n$1,000 = $1,000 + $0<\/pre>\n\n\n\n
Step 4: Calculate Free Margin<\/h3>\n\n\n\n
Free Margin = Equity - Used Margin\n\n$600 = $1,000 - $400<\/pre>\n\n\n\n
![<\/a><\/p>\n\n\n\nStep 2: Calculate Free Margin<\/h3>\n\n\n\nIf you don\u2019t have any open positions, then the Free Margin is the SAME as the Equity.<\/p>\n\n\n\nFree Margin = Equity - Used Margin\n\n$1,000 = $1,000 - $0<\/pre>\n\n\n\nSince you don\u2019t have any open positions, there is no margin being \u201cused\u201d<\/strong>.<\/p>\n\n\n\nThis means that your Free Margin will be the same as your Balance and Equity.<\/a><\/p>\n\n\n\nExample: Open a Long USD\/JPY Position<\/h2>\n\n\n\nNow let\u2019s make it a bit more complicated by entering a trade!<\/p>\n\n\n\nLet\u2019s say you have an account balance of $1,000.<\/a><\/p>\n\n\n\nStep 1: Calculate Required Margin<\/h3>\n\n\n\nYou want to go long USD\/JPY and want to open 1 mini lot (10,000 units) position. The Margin Requirement is 4%<\/strong>.<\/p>\n\n\n\nHow much margin (Required Margin) will you need to open the position?<\/p>\n\n\n\nSince USD is the base currency. this mini lot is 10,000 dollars, which means the position\u2019s Notional Value is $10,000.<\/p>\n\n\n\nRequired Margin = Notional Value x Margin Requirement\n\n$400 = $10,000 x .04<\/pre>\n\n\n\nAssuming your trading account is denominated in USD, since the Margin Requirement is 4%<\/strong>, the Required Margin will be $400<\/strong>.<\/a><\/p>\n\n\n\nStep 2: Calculate Used Margin<\/h3>\n\n\n\nAside from the trade we just entered, there aren\u2019t any other trades open.<\/p>\n\n\n\nSince we just have a SINGLE position open, the Used Margin will be the same as Required Margin.<\/a><\/p>\n\n\n\nStep 3: Calculate Equity<\/h3>\n\n\n\nLet\u2019s assume that the price has moved slightly in your favor and your position is now trading at breakeven.<\/p>\n\n\n\nThis means that your floating P\/L is $0<\/strong>.<\/p>\n\n\n\nLet\u2019s calculate your Equity:<\/p>\n\n\n\nEquity = Account Balance + Floating Profits (or Losses)\n\n$1,000 = $1,000 + $0<\/pre>\n\n\n\nThe Equity in your account is now $1,000<\/strong>.<\/a><\/p>\n\n\n\nStep 4: Calculate Free Margin<\/h3>\n\n\n\nNow that we know the Equity, we can now calculate the Free Margin:<\/p>\n\n\n\nFree Margin = Equity - Used Margin\n\n$600 = $1,000 - $400<\/pre>\n\n\n\nThe Free Margin is $600<\/strong>.<\/a><\/p>\n\n\n\nAs you can see, another way to look at Equity is that is the sum of your Used and Free margin<\/strong>.<\/p>\n\n\n\nEquity = Used Margin + Free Margin<\/pre>\n\n\n\nRecap<\/h2>\n\n\n\nIn this lesson, we learned about the following:<\/p>\n\n\n\nFree Margin<\/strong> is the money that is NOT \u201clocked up\u201d due to an open position and can be used to open new positions.<\/li>When Free Margin is at zero or less, additional positions cannot be opened.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"What does \u201cFree Margin\u201d mean? Margin can be classified as either \u201cused\u201d or \u201cfree\u201d. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9460"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/bpcdn.co\/images\/2019\/02\/13231958\/equity.png\"){kind=link}
![<\/a><\/p>\n\n\n\nExample: Open a Long USD\/JPY Position<\/h2>\n\n\n\nNow let\u2019s make it a bit more complicated by entering a trade!<\/p>\n\n\n\nLet\u2019s say you have an account balance of $1,000.<\/a><\/p>\n\n\n\nStep 1: Calculate Required Margin<\/h3>\n\n\n\nYou want to go long USD\/JPY and want to open 1 mini lot (10,000 units) position. The Margin Requirement is 4%<\/strong>.<\/p>\n\n\n\nHow much margin (Required Margin) will you need to open the position?<\/p>\n\n\n\nSince USD is the base currency. this mini lot is 10,000 dollars, which means the position\u2019s Notional Value is $10,000.<\/p>\n\n\n\nRequired Margin = Notional Value x Margin Requirement\n\n$400 = $10,000 x .04<\/pre>\n\n\n\nAssuming your trading account is denominated in USD, since the Margin Requirement is 4%<\/strong>, the Required Margin will be $400<\/strong>.<\/a><\/p>\n\n\n\nStep 2: Calculate Used Margin<\/h3>\n\n\n\nAside from the trade we just entered, there aren\u2019t any other trades open.<\/p>\n\n\n\nSince we just have a SINGLE position open, the Used Margin will be the same as Required Margin.<\/a><\/p>\n\n\n\nStep 3: Calculate Equity<\/h3>\n\n\n\nLet\u2019s assume that the price has moved slightly in your favor and your position is now trading at breakeven.<\/p>\n\n\n\nThis means that your floating P\/L is $0<\/strong>.<\/p>\n\n\n\nLet\u2019s calculate your Equity:<\/p>\n\n\n\nEquity = Account Balance + Floating Profits (or Losses)\n\n$1,000 = $1,000 + $0<\/pre>\n\n\n\nThe Equity in your account is now $1,000<\/strong>.<\/a><\/p>\n\n\n\nStep 4: Calculate Free Margin<\/h3>\n\n\n\nNow that we know the Equity, we can now calculate the Free Margin:<\/p>\n\n\n\nFree Margin = Equity - Used Margin\n\n$600 = $1,000 - $400<\/pre>\n\n\n\nThe Free Margin is $600<\/strong>.<\/a><\/p>\n\n\n\nAs you can see, another way to look at Equity is that is the sum of your Used and Free margin<\/strong>.<\/p>\n\n\n\nEquity = Used Margin + Free Margin<\/pre>\n\n\n\nRecap<\/h2>\n\n\n\nIn this lesson, we learned about the following:<\/p>\n\n\n\nFree Margin<\/strong> is the money that is NOT \u201clocked up\u201d due to an open position and can be used to open new positions.<\/li>When Free Margin is at zero or less, additional positions cannot be opened.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"What does \u201cFree Margin\u201d mean? Margin can be classified as either \u201cused\u201d or \u201cfree\u201d. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9460"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/bpcdn.co\/images\/2019\/02\/14142742\/free-margin1.png\"){kind=link}
![<\/a><\/p>\n\n\n\nStep 1: Calculate Required Margin<\/h3>\n\n\n\nYou want to go long USD\/JPY and want to open 1 mini lot (10,000 units) position. The Margin Requirement is 4%<\/strong>.<\/p>\n\n\n\nHow much margin (Required Margin) will you need to open the position?<\/p>\n\n\n\nSince USD is the base currency. this mini lot is 10,000 dollars, which means the position\u2019s Notional Value is $10,000.<\/p>\n\n\n\nRequired Margin = Notional Value x Margin Requirement\n\n$400 = $10,000 x .04<\/pre>\n\n\n\nAssuming your trading account is denominated in USD, since the Margin Requirement is 4%<\/strong>, the Required Margin will be $400<\/strong>.<\/a><\/p>\n\n\n\nStep 2: Calculate Used Margin<\/h3>\n\n\n\nAside from the trade we just entered, there aren\u2019t any other trades open.<\/p>\n\n\n\nSince we just have a SINGLE position open, the Used Margin will be the same as Required Margin.<\/a><\/p>\n\n\n\nStep 3: Calculate Equity<\/h3>\n\n\n\nLet\u2019s assume that the price has moved slightly in your favor and your position is now trading at breakeven.<\/p>\n\n\n\nThis means that your floating P\/L is $0<\/strong>.<\/p>\n\n\n\nLet\u2019s calculate your Equity:<\/p>\n\n\n\nEquity = Account Balance + Floating Profits (or Losses)\n\n$1,000 = $1,000 + $0<\/pre>\n\n\n\nThe Equity in your account is now $1,000<\/strong>.<\/a><\/p>\n\n\n\nStep 4: Calculate Free Margin<\/h3>\n\n\n\nNow that we know the Equity, we can now calculate the Free Margin:<\/p>\n\n\n\nFree Margin = Equity - Used Margin\n\n$600 = $1,000 - $400<\/pre>\n\n\n\nThe Free Margin is $600<\/strong>.<\/a><\/p>\n\n\n\nAs you can see, another way to look at Equity is that is the sum of your Used and Free margin<\/strong>.<\/p>\n\n\n\nEquity = Used Margin + Free Margin<\/pre>\n\n\n\nRecap<\/h2>\n\n\n\nIn this lesson, we learned about the following:<\/p>\n\n\n\nFree Margin<\/strong> is the money that is NOT \u201clocked up\u201d due to an open position and can be used to open new positions.<\/li>When Free Margin is at zero or less, additional positions cannot be opened.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"What does \u201cFree Margin\u201d mean? Margin can be classified as either \u201cused\u201d or \u201cfree\u201d. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9460"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/bpcdn.co\/images\/2019\/02\/14125949\/account-balance.png\"){kind=link}
![<\/a><\/p>\n\n\n\nStep 2: Calculate Used Margin<\/h3>\n\n\n\nAside from the trade we just entered, there aren\u2019t any other trades open.<\/p>\n\n\n\nSince we just have a SINGLE position open, the Used Margin will be the same as Required Margin.<\/a><\/p>\n\n\n\nStep 3: Calculate Equity<\/h3>\n\n\n\nLet\u2019s assume that the price has moved slightly in your favor and your position is now trading at breakeven.<\/p>\n\n\n\nThis means that your floating P\/L is $0<\/strong>.<\/p>\n\n\n\nLet\u2019s calculate your Equity:<\/p>\n\n\n\nEquity = Account Balance + Floating Profits (or Losses)\n\n$1,000 = $1,000 + $0<\/pre>\n\n\n\nThe Equity in your account is now $1,000<\/strong>.<\/a><\/p>\n\n\n\nStep 4: Calculate Free Margin<\/h3>\n\n\n\nNow that we know the Equity, we can now calculate the Free Margin:<\/p>\n\n\n\nFree Margin = Equity - Used Margin\n\n$600 = $1,000 - $400<\/pre>\n\n\n\nThe Free Margin is $600<\/strong>.<\/a><\/p>\n\n\n\nAs you can see, another way to look at Equity is that is the sum of your Used and Free margin<\/strong>.<\/p>\n\n\n\nEquity = Used Margin + Free Margin<\/pre>\n\n\n\nRecap<\/h2>\n\n\n\nIn this lesson, we learned about the following:<\/p>\n\n\n\nFree Margin<\/strong> is the money that is NOT \u201clocked up\u201d due to an open position and can be used to open new positions.<\/li>When Free Margin is at zero or less, additional positions cannot be opened.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"What does \u201cFree Margin\u201d mean? Margin can be classified as either \u201cused\u201d or \u201cfree\u201d. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9460"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/bpcdn.co\/images\/2019\/02\/13175522\/required-margin.png\"){kind=link}
![<\/a><\/p>\n\n\n\nStep 3: Calculate Equity<\/h3>\n\n\n\nLet\u2019s assume that the price has moved slightly in your favor and your position is now trading at breakeven.<\/p>\n\n\n\nThis means that your floating P\/L is $0<\/strong>.<\/p>\n\n\n\nLet\u2019s calculate your Equity:<\/p>\n\n\n\nEquity = Account Balance + Floating Profits (or Losses)\n\n$1,000 = $1,000 + $0<\/pre>\n\n\n\nThe Equity in your account is now $1,000<\/strong>.<\/a><\/p>\n\n\n\nStep 4: Calculate Free Margin<\/h3>\n\n\n\nNow that we know the Equity, we can now calculate the Free Margin:<\/p>\n\n\n\nFree Margin = Equity - Used Margin\n\n$600 = $1,000 - $400<\/pre>\n\n\n\nThe Free Margin is $600<\/strong>.<\/a><\/p>\n\n\n\nAs you can see, another way to look at Equity is that is the sum of your Used and Free margin<\/strong>.<\/p>\n\n\n\nEquity = Used Margin + Free Margin<\/pre>\n\n\n\nRecap<\/h2>\n\n\n\nIn this lesson, we learned about the following:<\/p>\n\n\n\nFree Margin<\/strong> is the money that is NOT \u201clocked up\u201d due to an open position and can be used to open new positions.<\/li>When Free Margin is at zero or less, additional positions cannot be opened.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"What does \u201cFree Margin\u201d mean? Margin can be classified as either \u201cused\u201d or \u201cfree\u201d. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9460"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/bpcdn.co\/images\/2019\/02\/14144711\/used-margin-usdjpy-example1.png\"){kind=link}
![<\/a><\/p>\n\n\n\nStep 4: Calculate Free Margin<\/h3>\n\n\n\nNow that we know the Equity, we can now calculate the Free Margin:<\/p>\n\n\n\nFree Margin = Equity - Used Margin\n\n$600 = $1,000 - $400<\/pre>\n\n\n\nThe Free Margin is $600<\/strong>.<\/a><\/p>\n\n\n\nAs you can see, another way to look at Equity is that is the sum of your Used and Free margin<\/strong>.<\/p>\n\n\n\nEquity = Used Margin + Free Margin<\/pre>\n\n\n\nRecap<\/h2>\n\n\n\nIn this lesson, we learned about the following:<\/p>\n\n\n\nFree Margin<\/strong> is the money that is NOT \u201clocked up\u201d due to an open position and can be used to open new positions.<\/li>When Free Margin is at zero or less, additional positions cannot be opened.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"What does \u201cFree Margin\u201d mean? Margin can be classified as either \u201cused\u201d or \u201cfree\u201d. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9460"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/bpcdn.co\/images\/2019\/02\/14145842\/equity-with-breakeven-floating-pl.png\"){kind=link}
![<\/a><\/p>\n\n\n\nAs you can see, another way to look at Equity is that is the sum of your Used and Free margin<\/strong>.<\/p>\n\n\n\nEquity = Used Margin + Free Margin<\/pre>\n\n\n\nRecap<\/h2>\n\n\n\nIn this lesson, we learned about the following:<\/p>\n\n\n\nFree Margin<\/strong> is the money that is NOT \u201clocked up\u201d due to an open position and can be used to open new positions.<\/li>When Free Margin is at zero or less, additional positions cannot be opened.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"What does \u201cFree Margin\u201d mean? Margin can be classified as either \u201cused\u201d or \u201cfree\u201d. Used Margin, which is just the aggregate of all the Required Margin from all open positions, was discussed in a previous lesson. Free Margin is the difference between Equity and Used Margin. Free Margin refers to the Equity in a trader\u2019s account that is NOT tied up in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9460"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9460\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/bpcdn.co\/images\/2019\/02\/14150425\/free-margin-usdjpy-example.png\"){kind=link}