What is Leverage and Margin? (MT5 Step-by-Step + Tiny Example)

Summary

Leverage lets you control a large position with a small deposit.
Margin is that deposit — the money your broker sets aside to keep your trade open.
In MT5, knowing your leverage and margin helps you manage risk and avoid margin calls.

Key Takeaways

• Leverage = Position Size ÷ Your Capital Used
  
  

• Higher leverage = bigger trades, but also bigger risk.
  
  

• Margin is the money locked by your broker when you open a trade.
  
  

• If your losses get too big, a margin call can close your trades.
  
  

• MT5 shows your margin and free margin live in the Terminal window.
  
  

A – The Idea in Simple Words

Leverage is like a loan from your broker that lets you trade more than you have.
If you have $100 and leverage 1:100, you can control $10,000 in the market.
Margin is the part of your money that is locked as a guarantee for that trade.
The rest of your balance is called free margin — money you can still use for new trades or to absorb losses.
Too much leverage can wipe out your account quickly if the market moves against you.

B – MT5 Steps to Check Leverage and Margin

1. Open MT5 and log in to your account.
   
   

2. Go to the Terminal window (Ctrl+T).
   
   

3. Click the Trade tab.
   
   

4. Look for:
   
   

• Balance (total funds)
  
  

• Equity (Balance ± open trade profits/losses)
  
  

• Margin (money locked for open trades)
  
  

• Free Margin (Equity – Margin)
  
  

• Margin Level (% = Equity ÷ Margin × 100)
  
  

5. Your account leverage is set by your broker — you can check it in your account details.
   
   

C – Quick Example with Numbers

You have:

• Account balance = $1,000
  
  

• Leverage = 1:100
  
  

• You open 1 lot EURUSD (100,000 units)
  
  

Required Margin = 100,000 ÷ 100 = 1,000 EUR (~$1,000 USD)

Here, your entire balance is used as margin — no free margin left for more trades.

D – Common Mistakes & Fixes

• Using too much leverage → Use smaller lot sizes to reduce risk.
  
  

• Not checking free margin → Always keep some free margin to handle losses.
  
  

• Confusing margin with fees → Margin is not a cost; it’s a locked deposit.
  
  

• Ignoring margin level % → If it drops too low, you risk a margin call.
  
  

• Trading multiple pairs without tracking margin → Can quickly over-leverage you.
  
  

E – If You Use My Tools (Optional)

Some of my MT5 indicators display margin level, free margin, and risk per trade directly on your chart.

Mini-Glossary

• Leverage: A ratio showing how much larger your trades are compared to your capital.
  
  

• Margin: Money set aside by your broker when you open a trade.
  
  

• Free Margin: Equity minus margin — money still available for trading.
  
  

• Margin Level: Equity ÷ Margin × 100.
  
  

• Equity: Your balance plus or minus open trade results.
  
  

• Balance: Total money in your account (no open trades).
  
  

• Margin Call: Broker action when your margin level is too low.
  
  

Checklist

• Know your account leverage.
  
  

• Check margin before opening trades.
  
  

• Keep free margin available.
  
  

• Watch margin level % to avoid margin calls.
  
  

• Use smaller positions if risk feels too high.
  
  

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