What Is Equity And Free Margin In Forex Trading. In fact, your equity increases with increase in profit and. Free margin this is the difference between your equity and the margin margin level this is the ratio of equity to margin, calculated by the following formula:
Free margin is also known as “usable margin” because it’s margin that you can “use”….it’s “usable”. As long as you do not have any open orders in your trading account, your account equity and free margin are the same as your account balance. Free margin is the difference of your account equity and the open positions’ required margin:
It also impacts the amount of new leveraged trades you’re allowed to take.
When you have no positions, no money from your account is used as the required margin. As long as you do not have any open orders in your trading account, your account equity and free margin are the same as your account balance. As a simple rule, if equity = margin, then margin level = 100% and free margin = 0 and therefore you will not be able to place new trades. Ad sign up today for our free limited time offer to invest in forex!