Free margin is the amount of money in a trader's account that is available to open new positions or maintain existing ones. It is calculated as the difference between the account equity and the margin used for current open positions.
Formula: Free Margin = Equity – Margin Used
Example Calculation:
If your Equity is $5,000 and the Margin Used for your open positions is $1,000:
Free Margin = $5,000 – $1,000 = $4,000
This means you have $4,000 of free margin available to open new trades or maintain existing positions.
Understanding forex margin levels and trading margin is essential for managing your funds effectively, as free margin represents your available margin for trading.