<p><strong>Free <a href="/NewSite/encyclopedia/margin/" class="ency-link">margin</a></strong> is the portion of a trader’s account balance that is not currently tied up as collateral for open positions and can be used to open new trades. It represents the available funds that a broker allows a client to allocate toward additional market exposure while still satisfying the margin requirements of existing trades.</p>

<h2>How It Works</h2>
<p>When a trader opens a position, the broker sets aside a portion of the account’s <strong>equity</strong> as <strong>margin</strong> to cover potential losses. <a href="/NewSite/encyclopedia/equity-account/" class="ency-link">Equity</a> is the sum of the account balance plus or minus any unrealized profit or loss on open trades. Free margin is calculated by subtracting the used margin from the current equity:</p>
<p><strong>Free Margin = Equity – Used Margin</strong></p>
<p>If the trader has no open positions, used margin equals zero and free margin equals equity. As positions are added, used margin rises and free margin falls. Most trading platforms, including <strong>MetaTrader 5</strong> offered by <strong>STB Provider</strong>, display free margin in real time so traders can see how much buying power remains.</p>

<h2>Why It Matters for Traders</h2>
<p>Free margin determines a trader’s ability to initiate new trades without triggering a margin call. When free margin approaches zero, the account has little buffer against adverse price movements, and the broker may automatically close positions to protect the lent funds. Maintaining a healthy free margin level helps traders:</p>
<ul>
<li>Stay within risk limits and avoid forced liquidations.</li>
<li>Take advantage of new opportunities as they arise.</li>
<li>Manage leverage effectively, especially when using higher leverage ratios.</li>
</ul>

<h2>Example</h2>
<p>A trader opens an account with STB Provider and deposits $10,000. The account balance is $10,000 and there are no open trades, so equity is $10,000 and used margin is $0. Free margin is therefore $10,000.</p>
<p>The trader then buys 1 standard lot of EUR/USD with a leverage of 1:100. The required margin for this lot is $1,000 (100,000 × 0.01). After the trade, used margin becomes $1,000. Assume the trade shows an unrealized profit of $200, raising equity to $10,200. Free margin is now:</p>
<p>$10,200 (equity) – $1,000 (used margin) = $9,200.</p>
<p>With $9,200 of free margin, the trader could open additional positions up to that amount before reaching the margin limit.</p>

<h2>Key Takeaways</h2>
<ul>
<li><strong>Free margin</strong> equals equity minus used margin and shows the funds available for new trades.</li>
<li>It is a key safety metric; low free margin increases the risk of a margin call or automatic position closure.</li>
<li>Monitoring free margin on platforms like MetaTrader 5 helps traders manage leverage and maintain control over their account exposure.</li>
<li>Keeping a sufficient free margin buffer allows flexibility to capture opportunities while protecting against adverse market moves.</li>
</ul>