# Basics

### What Is Margin?

‘Margin’ (or used margin) represents the amount of funds required to secure positions. When you place a trade, the ‘margin’ is locked in until the trade is closed.

The exact required margin amount depends on the instrument, the size of the position and the leverage.

To calculate it you can use the formula:

Trade size in units / Leverage = Margin in base currency

Trade size in units / Leverage X Exchange rate = Margin in the quote currency

Note that the ‘Margin’ figure displayed in your account details represents the total used margin for all open trades.

UEZ Markets offers a useful margin calculator tool: https://uezmarkets.com/trading-calculator/

#### Required Margin For FX

Now let’s see how the amount required depends on the chosen leverage:

- Higher leverage → Fewer funds needed as a margin
- Lower leverage → More funds needed as a margin

So, if you want to buy one standard lot (€100,000) for EUR/USD, without using any leverage (1:1), you need to have €100,000 on your account.

Let’s have a look at an example of 1 lot, using 1:30 leverage:

`100,000 / 30 = €3,333.33`

If your account currency is USD (current EURUSD price 1.11413):

`100,000 / 30 X 1.11413 = $3,713.77`

Please ensure you have read through our ‘lots and leverage’ lesson in order to understand the implications and risks of using leverage.

#### Required Margin For Other CFD Assets

Other asset groups have a fixed maximum leverage, depending on the asset.

To calculate the required margin for other assets, you can use the formula:

Trade size in units / Leverage X Market Price = Margin in base currency of the asset

Let’s look at an example of how to calculate margin for 1 lot of ‘’GOLD’’, which is denominated in USD currency, using 1:20 leverage (1 lot of Gold = 100oz, current price $1511.73).

`100oz / 20 X 1511.73 = $7,558.65`

Please refer to the UEZ Markets ‘’Leverage Information’’ or specific instrument specifications for details.

#### What Is A Free Margin?

Now let’s learn a few basic terms that are important to understand.

‘Free margin’ is essentially what you have ‘free’ to trade or withdraw, it’s the amount on a trading account that is not currently being used to secure existing trades, and which you can use to place new trades.

`Equity - used margin = Free margin`

#### Equity vs Balance

‘Equity’ is the balance of your trading account, plus (or minus) unrealised profits (or losses) from any open positions that you have.

As soon as a trade is closed, the unrealised profit or loss will immediately reflect in your ‘balance’.

So, when there are open trades, these figures will be different, as the equity will fluctuate but balance remains fixed until trades are settled. When you don’t have any open trades, your Equity figure will match your Balance.

#### What Is A Margin Level?

The ‘margin level’ is the ratio of the amount of equity you have compared to the used margin.

It is represented as a % and calculated with the formula:

`Equity / Margin X 100`

When the margin level drops to 100% or lower, that means the entire equity of your trading account is used as collateral, and you can no longer open any other positions. This results in a negative ‘free margin’.

#### What Is A Stop Out?

A ‘Stop Out’ is a forced automatic closing of a trader’s positions in case that person’s trading account equity falls below a certain level (it is a fixed %, depending on the platform, please check the platform comparison table for details).

Let’s look at an example using a Stop Out level of 50%. This means that once your Equity falls to a value equal to half of your used margin, stop out(s) will begin to occur.

So, if your used margin is €1000, a Stop out will be triggered when your equity falls to €500.

Stop Outs help to prevent accounts from falling into a negative balance, however, in very fast-moving markets, or the case of market gaps, this is possible.

UEZ Markets offers negative balance protection to all its traders so you can lose only up to the amount deposited. Please check our Order Execution Policy for further details.

#### Account Figures Overview

Let’s remind ourselves of the definitions of the main trading account terms:

- ‘Margin’ is the funds required to place each trade.
- ‘Free Margin’ is the amount you have free to place new trades with.
- ‘Equity’ is the overall balance of your account, including unrealised PnL.
- ‘Margin Level’ is displayed as a %, representing the amount of equity you have compared to the used margin.
- ‘Stop Outs’ are triggered at a certain margin level and will begin closing (or partially closing) trades, to prevent further losses.