Leverage Trading Calculator
One of the most important aspects of risk management in leveraged trading is to be able to calculate your own margin requirement for each position you open in forex, stocks, and commodity trading. Without knowing the margin requirement at different leverage ratios you might be throwing your entire account on one single position and if you are using high leverage you might get completely wiped out.
So, in this short tutorial, I will share a smart tool called a leverage trading calculator where you can calculate your own margin capital before opening any position. Another great way to use the calculator is simply to calculate how much money you need to deposit in order to open a certain position. Calculate how much of your margin capital you need to add to open a leveraged position at your chosen leverage ratio. This calculator works when trading Forex, Stocks, Equities, Metals, and Commodities.
Leverage Trade Calculator
To use the leverage trade calculator, follow the steps below.
- Select your instrument eg. EUR/USD.
- Choose your deposit currency.
- Add your leverage ratio.
- Select the position size (units) you want to open.
- Insert the current price of the asset (or leave it at market price)
- Click Calculate.
How to calculate leverage in trading
When trading with leverage, especially in a high leverage trading strategy, having a leverage trading calculator to calculate your margin requirement is essential to know how much capital you need for each position.
Also read: What is high leverage trading?
When you add leverage to a position your margin requirements fall but you still need to use your own capital to open a trade. The calculation of leverage is not that complicated but it always helps to use a calculator. Through our calculator above you can insert all the criteria for your trade, including the leverage to calculate your biggest position size.
When calculating your leveraged position you need to know five things, the ticker, your deposit currency, the leverage ratio, the position size (or units), and the price of the asset when calculating. If you don’t modify the price of the asset, our calculator will calculate based on the current market price of the asset.
To calculate losses in leverage see our guide on how to calculate a leveraged loss.
How to calculate leverage and margin in Forex
To calculate your margin based on your leverage ratio when trading Forex, follow these steps:
- Insert the currency pair you are trading.
- Select the deposit currency of your choice.
- Choose the leverage ratio you are going to use.
- Add the position size in units.
- Select the price of the forex pair or leave it to show the market price.
- Click calculate!
The number below will tell you how much money you need from your own margin capital to open this position. If you don’t yet have money in your trading account this is how much you need to deposit in order to open this position.
To calculate your forex leverage, see our forex leverage calculator.
How to calculate leverage and margin in Equities
To know your margin while trading leveraged equities, follow these simple steps:
- Select the equity you are trading.
- Add your deposit currency (for example USD, EUR, or GBP).
- Insert the leverage ratio you want to use.
- Choose the equity position size, in units.
- Select the market price of your equity.
- Click calculate!
Now you will see the amount of capital needed to open your equity position with leverage. If you don’t have money in your equity account, this is the amount you need to deposit in order to open the position size with this leverage ratio.
How to calculate leverage and margin in Metals
To know how much capital is needed for each metal position, use this guide:
- Choose your metal trading pair.
- Input your national deposit currency.
- Select the leverage ratio you want to use.
- Add the position size.
- Select the market price of your metal asset.
- Click calculate.
The number seen below is the actual margin requirement of your metal position based on the leverage ratio you have chosen. If you don’t yet have money in your account, this is the amount you need to deposit in order to open this position.
How to calculate leverage and margin in Commodities
In commodity trading, to know your required margin, follow these steps:
- Find your commodity in the list.
- Add the fiat currency you use.
- Choose leverage ratio.
- Input your position size, in units.
- Insert the price of your commodity or leave it blank for the current market price.
- Click calculate!
Your calculated number is your own capital needed to open this position. If you don’t have any margin capital in your leveraged commodity account, this is how much you need to deposit of your own national currency to open the position.
How much margin capital do you need to open a leveraged position?
To calculate your needed margin capital for your leveraged position simply use the calculator we have provided. Here you can insert all the criteria for your position. Start with the instrument you are trading, then choose your local currency, next add your leverage ratio for the position, choose the position size you want to open, insert the price of the asset, and then click calculate. The calculator will tell you how much of your own capital is needed to open the position at the chosen leverage ratio. Now you can fund your account knowing how much you need to get started.
Benefits of using a leverage trading calculator
The benefit of knowing how to calculate your leverage and required margin is that you can manage your risk much better when you know how much of your own capital is being used for each position. It happens quite frequently that new traders don’t know how much of their own capital they are putting into each position and they end up losing 25%-50% of their total account because they were not well educated. Below is a list of the biggest benefits of using a leverage calculator:
- Risk management – For a beginner, it might not be obvious why calculating your leveraged position is so important, but if you think about how fast you might lose your money when trading with high leverage you will see that it’s easy to bet the whole account in one trade. This is something that you want to avoid and with a calculator, you will see exactly how much risk you are taking with each trade.
- Margin requirement – Let’s say that you have a $1000 account and you want to open 5 different positions in different markets with 1:10 leverage, then you need to know how to calculate your margin requirement that you will spread out among these positions.
- Position sizing – On some occasions, if you want to reduce your position sizes and spread out your account over several trades, then it’s very important that you know how to calculate your position size in leverage trading.
- Control – To have overall control over your trading activities is a must to not spiral down a bad losing streak, take on too much risk, or lose more money than necessary. Use this calculator to find out exactly how much of your money you are spending on each trade.
When I use leverage for my positions I always know exactly how much of my own margin is required for each position and that way I know how much I stand to lose if things were to go south. See this as one of your first tools in risk management while trading leveraged products.
Separate leverage and margin when calculating
Here is another very important topic for beginner leverage investors and traders. Leverage and margin can be difficult to separate and it becomes even more difficult when it’s time to calculate. However, if you want to stay on top of this game here is the magic rule you can use whenever you question yourself:
- Margin = Your own capital
- Leverage = The borrowed capital you receive from your broker
If you can separate these two variables you will have a much easier time understanding your risk factors and also how much money you are required to deposit in order to open a certain position size. Now, our calculator at the top will tell you the margin requirement for the position you are inserting so keep in mind that the calculated dollar amount is what is required from your own capital to open the position.
Other traders also ask
The margin requirement in Forex is easy to calculate if you have a leverage calculator at hand. Use our forex margin and leverage calculator at the top of this page and follow the short guide to calculate your own margin.
A 5% margin means that you need to add 5% of your own capital in order to open the position. For example, if you want to open a position size of $20,000, then a 5% margin requirement would be $20,000 x 0.05 = $1000.
The best way to calculate leverage and margin in stocks is to use our calculator at the top of this page. Use the calculator and our quick guide for stocks to find out your own margin requirement.
The commodity margin is calculated the same way as any other asset class. Follow our guide for commodity leverage calculating and use our calculator at the top of this page to find out how much money is required for your position.