Leverage Calculator
Calculate the effective leverage a position carries, the margin it uses, and the move that would wipe out your equity.
A forex leverage calculator has to deal with two meanings of the word that are easy to confuse. Broker leverage is the maximum ratio you are permitted to use; effective leverage is the ratio you are actually running — the value of your open position divided by your account equity.
Formula: effective leverage = position value ÷ account equity
Your figures
Full notional value of the position, not the margin posted.
Optional — used to show margin and margin level.
Results
Effective leverage
10.00 : 1
position value to account equity
- Adverse move that would wipe out equity
- 10.00%
- Equity as a share of position value
- 10.00%
- Required margin
- US$3,333.33
- Free margin
- US$6,666.67
- Margin level
- 300%
- Maximum position at broker leverage
- US$300,000.00
What this means
This position carries 10.00 : 1 effective leverage, so a 10.00% move against it would equal the entire account equity. Effective leverage is what the position actually uses; broker leverage only sets the maximum allowed.
- Losses are not capped at the margin posted unless the account has negative-balance protection.
Effective leverage: 10.00 : 1
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Continue with these figures
About the Leverage calculation
The second one is what determines your exposure. An account with 500:1 available but a position worth twice its equity is running at 2:1, and behaves accordingly.
This leverage calculator estimates effective leverage, the margin a position uses and the margin level that results, and — most usefully — how far the market would have to move against the position to wipe out the account equity.
Leverage formula
effective leverage = position value ÷ account equity
move to wipe out = (account equity ÷ position value) × 100
required margin = position value ÷ broker leverage
free margin = account equity − required margin
margin level % = (account equity ÷ required margin) × 100- position value
- The full notional value of the position, not the margin posted.
- account equity
- Balance plus or minus the profit on open positions.
- margin level
- Equity as a percentage of margin used. Brokers close positions when this falls too low.
Effective leverage and the wipe-out move are reciprocals of each other. At 10:1, a 10% adverse move equals the entire equity; at 50:1 it takes only 2%. Expressing it as a percentage move makes the exposure concrete in a way the ratio alone does not.
Major currency pairs typically move well under 1% in a day, which is precisely why leverage is used in forex at all — and why high effective leverage turns an ordinary daily range into a significant portion of an account.
Margin level is the figure brokers monitor. It falls as losses reduce equity, and each broker sets a threshold below which it starts closing positions.
Leverage: a worked example
A $10,000 account holding a position with a notional value of $100,000, with the broker offering 30:1 leverage.
- Effective leverage100,000 ÷ 10,000 = 10.00 : 1
- Move to wipe out equity(10,000 ÷ 100,000) × 100 = 10%
- Required margin100,000 ÷ 30 = $3,333.33
- Free margin10,000 − 3,333.33 = $6,666.67
- Margin level(10,000 ÷ 3,333.33) × 100 = 300%
The position runs at 10:1 even though the broker permits 30:1. A 10% adverse move in the underlying would equal the entire account equity.
How to use the Leverage calculator
- Enter your account equity — the balance adjusted for profit or loss on any open positions.
- Enter the notional value of the position, not the margin posted against it. For forex, that is units multiplied by the price.
- Optionally add your broker's leverage to see margin used, free margin and margin level.
- Look at the wipe-out percentage rather than the trading leverage ratio itself. It is the same information in a more usable form.
Limitations of the Leverage calculator
Every calculation makes assumptions. These are the ones that matter here.
- Covers a single position. With several open at once, effective leverage is the combined notional value over equity, and correlated positions add exposure faster than the sum suggests.
- Does not model margin calls or stop-out levels, which vary by broker.
- Assumes no negative-balance protection. Where it is absent, losses can exceed the account balance.
Frequently asked questions about Leverage
What is the difference between broker leverage and effective leverage?
Broker leverage is a ceiling — the most you are allowed to use. Effective leverage is what you are actually using on the positions you hold. Only the second one affects your risk.
Is high leverage always dangerous?
Leverage available is not leverage used. An account with 500:1 available but a small position is running low effective leverage. The risk comes from position size relative to equity, which is what this calculator measures.
What margin level triggers a stop-out?
It varies by broker, commonly somewhere between 20% and 100%, which is why the margin level calculator reports the figure alongside effective leverage. The exact threshold is in your broker's terms. Below it, positions are closed automatically without further notice.
Why is retail leverage capped, and at what level?
Because regulators concluded that retail clients were losing money at leverage levels they did not understand. The cap is jurisdictional rather than universal: the FCA in the UK and ESMA across the EU set 30:1 on major currency pairs, with lower limits on more volatile instruments, alongside a mandatory margin close-out rule and negative-balance protection. The US limit is 50:1 on majors, Australia matches 30:1, and Japan sets 25:1. Some jurisdictions impose no cap at all, and clients classified as professional can usually access more wherever they trade. The calculator takes whatever figure you enter, because only your own account terms say which of these applies to you.
Last reviewed . See our methodology and editorial policy.
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