What is Margin Requirement?
Margin requirement is the percentage of a position's full notional value that a trader must hold in their account to open or maintain that position. On a 1:100 leverage account, the margin requirement is 1% — a $100,000 EUR/USD position requires $1,000 in margin. Prop firms typically offer 1:30 to 1:100 leverage on forex evaluations and 1:5 to 1:20 on funded accounts. Hitting the margin call limit (used margin > free margin) typically terminates accounts.
Key takeaways
The capital needed to open a leveraged position.
On a 1:100 leverage account, the margin requirement is 1% — a $100,000 EUR/USD position requires $1,000 in margin.
Prop firms typically offer 1:30 to 1:100 leverage on forex evaluations and 1:5 to 1:20 on funded accounts.
Hitting the margin call limit (used margin > free margin) typically terminates accounts.
Margin Requirement vs. Leverage
Two terms that frequently get conflated. Here's how they actually differ.
Margin RequirementMarket Mechanics · PRO
LeverageMarket Mechanics · PRO
The capital needed to open a leveraged position.
The ratio of position size to account capital.
Frequently asked questions
What is Margin Requirement?
Margin requirement is the percentage of a position's full notional value that a trader must hold in their account to open or maintain that position. On a 1:100 leverage account, the margin requirement is 1% — a $100,000 EUR/USD position requires $1,000 in margin. Prop firms typically offer 1:30 to 1:100 leverage on forex evaluations and 1:5 to 1:20 on funded accounts.
Why does Margin Requirement matter for prop firm traders?
Margin Requirement is one of the building blocks of how markets and trading actually work. Without a clean mental model of it, position sizing, risk calculations, and rule-compliance all break down.
How is Margin Requirement different from Leverage?
Margin Requirement and Leverage are commonly confused. Margin Requirement: The capital needed to open a leveraged position. Leverage, by contrast: The ratio of position size to account capital.
What should traders watch out for with Margin Requirement?
Prop firms typically offer 1:30 to 1:100 leverage on forex evaluations and 1:5 to 1:20 on funded accounts. Hitting the margin call limit (used margin > free margin) typically terminates accounts.