Measure notional exposure, effective leverage, margin required, and remaining leverage capacity without confusing leverage with planned trade risk.
STEP-BY-STEP
How to use this tool
- Enter current equity after open profit or loss—not only the starting balance.
- Enter the planned standard-lot size and confirm the contract units.
- Enter the current pair price and account-currency conversion rate.
- Enter the leverage actually allowed for that symbol and account.
- Review effective leverage, margin, capacity used, and remaining notional headroom.
- Use the Forex Margin and Position Size calculators to review collateral and stop-based risk separately.
WORKED EXAMPLE
See the calculation in context
A 0.50-lot EUR/USD position at 1.1000 represents about $55,000 of notional exposure. On $10,000 equity, effective leverage is 5.5:1. At 50:1 available leverage, estimated required margin is $1,100.
Calculation method
Account-currency notional exposure = lots × contract units × pair price × conversion rate. Effective leverage = notional exposure ÷ equity. Estimated margin = notional exposure ÷ available leverage.
AVOID THESE ERRORS
Common mistakes
- Treating maximum available leverage as a target
- Confusing notional exposure with maximum loss
- Ignoring symbol-specific leverage limits
- Leaving conversion at 1 for a different account currency
- Using starting balance when equity is lower
- Increasing position size merely because capacity remains
FREQUENTLY ASKED
Questions and answers
Does higher leverage make a trade safer?
No. It reduces collateral required for the same exposure but does not reduce the position’s price sensitivity.
Is effective leverage the same as broker leverage?
No. Effective leverage measures actual notional exposure relative to current equity; broker leverage is the maximum or margin ratio available.
How should I calculate trade risk?
Use position size, stop distance, pip value, execution costs, and possible slippage.