Used Margin vs. Usable Margin in FOREX Trading

The subject of FOREX margin has been the source of a lot of confusion over the years. Many traders that regularly trade FOREX have no idea how margin works in their accounts. They know that they could possibly get a margin call, but they do not fully understand how they work. The terms "used margin" and "usable margin" are both important but many traders do not understand the difference. Here are the basics of used margin and usable margin in FOREX trading.

Used Margin

Depending on what type of FOREX account you have, you could have varying levels of margin requirements. Some popular levels of leverage are 100:1 and 200:1. If you open a trade for one standard lot, your used margin will be $100. This is the amount of margin that you have used out of your total equity.

Usable Margin

The usable margin is the amount of money that you have left to use. The usable margin is always equal to the equity in your account minus the used margin. Some people think that it is calculated off of the account balance, but this is not true. It is always calculated off of the equity.

In the earlier example, if you had a $10,000 account and you opened a trade for one lot, your used margin is $100. Your usable margin is $9900.  

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