Leverage Math
Margin, Leverage & Broker Calculator
Understand required margin math. Learn how leverage ratios affect stop-out limits and account health.
01. The Math of Financial Leverage
Leverage allows you to control large contract sizes with small deposits. A 1:100 leverage ratio means you can control $100,000 with $1,000 margin.
02. Calculating Required Margin
Required margin is calculated as: Position Value / Leverage. Ensure your account always maintains sufficient free margin.
03. Avoiding Margin Calls and Stop Outs
If free margin drops below the broker's stop-out limit (e.g., 50% margin level), positions are liquidated. Keep leverage conservative in backtests.