Free Margin, in its simplest definition, is the money in your trading account that is available for trading. It is calculated by using this basic formula: Remember that Equity is the Balance, plus or minus any profit or loss from open positions. Let’s take a look at this example. Say that someone enters a trade with the following conditions: Decides to buy 2 lots of EURUSD at the exchange rate of 1.20000. So, the transaction will amount to 240 000 US Dollars. The required margin for this position is calculated as follows: 240 000 divided by 50. If after entering this trade, the price of EURUSD fell to 1.19050, he incurred a loss of 0.00950 pips. Which is equivalent to: In this case, the trader’s Free Margin would be: In the next video I will tell you all about Margin Level. Stay tuned!