# What is Free Margin Level in Forex Trading?

## What is free margin level in forex trading?

Free margin is the available amount in your trading account to open new trades. It is calculated by deducting used margin from equity. It is also called usable margin.

If you make any profit, your free margin increases and if you make losses, your free margin decreases.

Now if you have an open position, the available amount which you can use to open new positions in the market is called Free margin in Forex.

Let me explain with an example.

## Example of free margin in forex

Letâ€™s say you have a trading account with a balance of \$1000. You donâ€™t have any open trades or positions. Now weâ€™ll calculate free margin.

### Example 01:

1. First, letâ€™s calculate equity.

Equity = Account balance + Profit/Loss

As youâ€™re not trading currently and donâ€™t have no open positions, your equity is

Equity = \$1000 + \$0 = \$1000

So the equity is the same as the account balance.

1. Now letâ€™s calculate free margin

Free Margin = Equity – Used Margin

You donâ€™t have any open positions which means you havenâ€™t used any margin yet.

Free margin = \$1000 – \$0 = \$1000

### Example 02:

You opened a 1 mini lot position with 5% required margin.

1. Your  Required Margin = Notional Value x Margin Requirement = \$10,000 x .04
1. Now you have opened a position in the market. Your required margin is your used margin.