What is Leverage and Margin? (MT5 Step-by-Step + Tiny Example) - Analytics & Forecasts - 14 August 2025

What is Leverage and Margin? (MT5 Step-by-Step + Tiny Example) – Analytics & Forecasts – 14 August 2025

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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

  • 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)

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

    • C – Quick Example with Numbers
    You have:

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

    Term

    Value

    Balance

    $1,000

    Position Size

    $100,000

    Leverage

    1:100

    Margin

    $1,000

    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.

    Follow the trades & updates on MQL5 → https://www.mql5.com/en/channels/issam_kassas

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