Forex & Gold Margin Calculator - Formula & Leverage Explained | Ashiran

Forex & Gold Margin Calculator - Accurate & Easy to Use

New traders often wonder: "How does Margin relate to Leverage?" and why do some people claim that "High leverage blows accounts"? This article provides the answers along with the exact calculation formula.

What is Margin? Why is it Important?

Margin is the amount of money you must deposit with your broker as collateral to open a position (similar to a down payment). The amount required depends on the Leverage level you selected when opening your account.

Common Leverage Examples:

• 1:100 (Deposit $1 to control $100)
• 1:500 (Deposit $1 to control $500)
• 1:Unlimited (Requires almost zero margin)

In short: Leverage increases your "Buying Power," allowing you to trade high-value assets using only a small portion of your capital.

Myth Buster: Does High Leverage Really Blow Accounts?

The real cause of blown accounts is Overtrading—opening a Lot Size that is too large for your account balance to handle (like maxing out a credit card with no money to pay it back).

On the contrary, having high leverage actually reduces the required Margin, leaving you with more Free Margin to withstand market volatility (drawdown), provided you do not overtrade.

Forex Margin Formula (Manual Calculation)

For those who want to understand the math behind the trade, here is the standard formula:

Calculation Example

Let's say you want to trade Gold (XAUUSD) with the following conditions:

• Current Gold Price: 2,000 USD / oz
• Account Leverage: 1:500
• Standard Contract Size: 100
• Desired Position: 0.10 Lot

Apply the formula:
Margin = (0.10 × 100 × 2,000) ÷ 500

Result: You only need $40 USD as Margin.

Summary: How to Trade Safely?

• High Leverage is not scary: If you manage your Lot Size correctly, high leverage simply allows you to use less capital per trade.
• Watch your Lot Size: Be disciplined. Don't open massive positions just because you have plenty of Free Margin.
• Always Calculate MM: Before every trade, know exactly how much you are risking.