Margin and Free Margin in MT5 Explained
What margin, free margin, equity and margin level mean in MetaTrader 5, how margin is calculated for a XAUUSD position, and what happens at a margin call and at stop-out.
By the AURAX teamPublished 4 min read
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Margin is the part of your equity the broker sets aside to keep a position open; free margin is what is left for new positions and for absorbing losses. MT5 shows both in the Trade tab of the Toolbox, together with margin level — equity divided by margin, as a percentage. When losses push margin level down to the broker's stop-out level, the broker starts closing positions for you.
| Figure | Formula | Meaning |
|---|---|---|
| Balance | Deposits + closed results | Money in the account ignoring open trades |
| Equity | Balance + floating profit/loss | What the account is worth right now |
| Margin | Sum of each position's margin | Collateral locked by open positions |
| Free margin | Equity − margin | Room for new positions and for losses |
| Margin level | Equity ÷ margin × 100% | How close the account is to a margin call |
Part of the Drawdown and risk guide.
How margin is calculated for gold
For most brokers' XAUUSD contracts, MT5 uses the leverage-based CFD formula:
margin = lots × contract size × price ÷ leverage
- 1 lot × 100 oz × $3,000 ÷ 100 = $3,000
- 0.10 lot at the same price and leverage = $300
Brokers can set gold's margin differently from the account's headline leverage — a fixed margin per lot, or a margin percentage for the symbol. The symbol's Specification window shows the calculation mode and rate that apply to your account. Leverage in XAUUSD trading covers what leverage does and does not change.
A worked example
A $10,000 account buys 1 lot of XAUUSD at $3,000 with 1:100 leverage. Margin is $3,000.
| Gold price | Floating P/L | Equity | Free margin | Margin level |
|---|---|---|---|---|
| $3,000 | $0 | $10,000 | $7,000 | 333% |
| $2,980 | −$2,000 | $8,000 | $5,000 | 267% |
| $2,950 | −$5,000 | $5,000 | $2,000 | 167% |
| $2,930 | −$7,000 | $3,000 | $0 | 100% |
| $2,915 | −$8,500 | $1,500 | −$1,500 | 50% |
At a 100% margin level free margin is zero: no new position can be opened. If the broker's stop-out is at 50%, the position is closed at around $2,915 — an $85 move — with $8,500 of the $10,000 gone.
Margin call and stop-out
| Level | What happens | Set by |
|---|---|---|
| Margin call | A warning; often new positions are blocked | The broker |
| Stop-out | The broker closes positions, usually the most losing first, until margin level recovers | The broker (EU retail CFD rules require close-out at 50% of required margin) |
Both levels vary between brokers and account types. They are in your account terms and often in the MT5 account details. The European Securities and Markets Authority's retail CFD measures introduced a 50% margin close-out rule per account.
Free margin with several positions
Free margin is shared by everything in the account. Every new position uses some, and every open loss reduces equity — so free margin shrinks from both sides at once. A broker refuses an order when free margin is below the margin the new position needs.
For strategies that add positions as price moves against them, that refusal is part of the risk: a grid whose next level cannot be afforded simply stops adding, and the positions already open keep losing. On a $5,000 account at 1:100, a doubling grid from 0.01 lot cannot open its eighth level at a $3,000 gold price. The grid risk calculator shows which levels an account can carry.
Watching margin in practice
- Keep margin level far above the stop-out — several hundred percent — in normal conditions.
- Check how margin changes if your strategy opens everything it is allowed to.
- Remember weekends and holidays: some brokers raise margin requirements before them.
- Watch equity, not balance. Margin level is computed from equity.
Sources
- Margin calculation (Forex and CFD) — MetaQuotes — MetaTrader 5 Help
- ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors — European Securities and Markets Authority
Educational content, not financial advice. Trading gold and other leveraged products carries a high level of risk, including the possible loss of some or all of your capital. Automated strategies do not guarantee profit, and past or simulated performance is not indicative of future results. Risk disclosure.