Margin

Margin is not a cost. It is a hold. Your broker ring-fences part of your balance as collateral for as long as the position is open, then hands it straight back when you close. Nothing is spent. Which is exactly why "I still have plenty of margin left" and "I am safe" are not the same sentence. ### One number is frozen, one number moves Required margin comes from the size you open with, not from where price goes afterwards. It is notional size divided by the leverage on the account: one standard lot of EURUSD at 1:30 locks 100,000 / 30 = 3,333 euros of collateral, converted into your account currency at the prevailing rate. Open a second lot and the requirement doubles. Price moving against you does **not** increase it. What moves is equity: balance plus floating profit and loss. Every pip against you shaves equity while required margin sits there unchanged. The ratio between the two is the number your broker actually watches. Alpari's help documentation states it plainly: margin level = (equity / used margin) x 100. It starts high, falls as losses accumulate, and it is what trips the margin call and then the stop-out. Not your balance. Not your P&L in dollars. That ratio. ### Where the leverage caps come from The leverage you are offered is not purely a broker's marketing choice. In the US, [17 CFR 5.9](https://www.law.cornell.edu/cfr/text/17/5.9) sets a minimum security deposit of 2% of notional value on major currency pairs and 5% on all other pairs, which works out to 50:1 and 20:1. In the EU, [ESMA's product intervention measures](https://www.esma.europa.eu/press-news/esma-news/esma-adopts-final-product-intervention-measures-cfds-and-binary-options), since carried into national rules, cap retail leverage at 30:1 on major currency pairs, 20:1 on non-major pairs, gold and major indices, 10:1 on other commodities, 5:1 on individual equities and 2:1 on crypto, and require providers to close retail positions out at 50% of minimum required margin. Brokers advertising 1:500 are simply operating outside those regimes. The arithmetic of a losing position does not soften. Only the question of who absorbs the damage changes. ### The mistake Beginners read free margin (equity minus used margin) as spending money, so they keep adding positions while it is still a big-looking number. But free margin drains from two directions at once: floating losses pull equity down, and every new position pushes used margin up. An account showing a comfortable free-margin figure can be one bad hour from a call. Leverage decides how big the hold is. Margin level decides when the broker starts warning you. Stop-out is where it stops being your decision.