Margin requirement

So when a broker’s marketing team says their margin requirement is 1%, it means that they require 1% of your trade size in order to lend you the amount you need for the trade. For example if you are trading $100,000 position size, then the broker requires $1,000 (1%) of your margin in order to make the loan. As I stated before, this number generally does not vary unless you specifically change the deal with your broker. Furthermore, in this example we know what the margin requirement is, but we don’t yet have enough information to calculate leverage, because we don’t know what our account equity is (more about this later). Your broker would normally quote that as “100:1” leverage, which is not entirely accurate since our actual leverage also depends on our account equity. What they are actually saying is that your maximum leverage, based on their margin requirement, would be 100:1. How much of that leverage you actually use is entirely up to you, as long as you don’t surpass this maximum.