Margin calculator

You can trade price movements with a contract for difference, also called a CFD, without owning the asset. When you open a position, you use leverage, which means controlling a large trade with a much smaller cash deposit.

Imagine buying 1,000 share CFDs, each priced at £42.50. The total value of your trade is £42,500. If your broker sets a 5% margin rate, which matches 20:1 leverage, you only deposit £2,125 to open the £42,500 position.

Daily profit or loss applies to the full £42,500 position, not just your £2,125 deposit. A rise to £45.00 in the share price, if it occurs, would value the position at £45,000 and give you £2,500 profit. The reverse happens with a small price fall, which can wipe out your deposit fast.

A forex margin calculator or manual check uses this method. Begin with the position's total value, found by multiplying the units by the market price.

Multiply the position's total value by the margin percentage needed for that market. If your broker shows leverage instead of a percentage, you divide the total position value by the leverage figure.

In formula form, each method gives the same result:

Deposit required = position value × margin rate

Margin = position value ÷ leverage

At a 5% margin rate, trading £10,000 worth of CFDs means you need a £500 deposit. You can use our lot size calculator to choose a trade size based on your risk limit.

Financial Conduct Authority rules cap retail leverage between 30:1 and 2:1, depending on how sharply the market price moves. The total trade value on UK retail accounts typically needs margin ranging from 3% to 50%.

Markets with greater stability, such as major currency pairs, carry lower margin percentages. More volatile markets need a larger deposit. The forex brokers regulated by the FCA must apply these minimum retail margin rates at least, though a broker may request a larger deposit when market conditions are volatile.

We compare how these limits work in practice on our guide to high leverage forex brokers.

UK retail rules require your broker to begin closing positions when account funds drop to 50% of the margin needed for open CFD trades. Brokers refer to this threshold as maintenance margin: the least cash you must keep in your account while a trade remains open.

Take an example where you open a £100,000 position on EUR/USD at 1:20 leverage with a £5,000 margin deposit. With maintenance margin at 50%, your account must hold at least £2,500 to support the trade. If prices move against you and your funds fall below that level, you must add money or close positions before your broker closes the trade.

Under FCA rules, a retail client cannot lose more than all of the funds in their trading account. Our drawdown calculator shows how a series of losses affects your account balance.