# What Is Free margin In Forex

## Forex Free Margin Example

For example, now we have a forex trading account with a \$2000 balance and a 5% CFD margin. Then we need to open a position that has a \$10000 cost. At the endpoint of opening the trade, the following is true.

• Account balance=\$2000
• Margin =\$500 (5% of \$10000)
• Free Margin= \$2000-\$500= \$1500 (Equity – Used Margin)
• Equity= \$2000

If the position value increases, offering us an unrealized \$50 profit, we can discover the following things

• Equity Account Balance:- \$2000
• Used Margin = \$500
• Free Margin =\$1550
• Equity= \$2050

The equity balance and utilize Margin do not modify. Yet the forex free margin and the Equity both grow to remember the unrealized profit of the open position. It is essential to mention that If the position value drops by \$50 rather than increases, the Equity and free Margin would have fallen by the same amount. ### Why Margin is necessary in Trading Market?

Free margin, also known as usable margin, fights negative price fluctuations in your available trades and opens new leveraged trades. It grows with profitable positions and drops with losing positions.

## What is a good level of free margin in forex?

#### How to calculate Margin Level

Let’s say that your Equity is 15000 and your Margin is 500, so your margin level is calculated through the following formula.

Margin level= Equity divided by margin and the result multiplied by 100

(15000/500) x 100 =300%

#### What occurs if my Free Margin declines to zero?

If your free margin declines zero ,You’ll receive a margin call with no margin left to protect any possible losses from open forex positions. You’ll need to recharge your account or close all your open positions.