Forex Margin Explained for AU Traders (2026)

Summary, what margin is in three lines

Margin is the deposit your broker requires you to commit to open and maintain a leveraged position. It’s not a fee. It’s collateral, locked while the trade is live and released when you close. ASIC requires Australian retail brokers to close out positions by the time account equity falls to 50% of initial margin used (brokers may trigger earlier), and to provide negative balance protection so retail accounts can’t go below zero. Our negative balance protection guide covers exactly how that floor works and the one situation that removes it.

Three core formulas drive everything on the rest of this page:

• Initial margin = Position size / Leverage ratio
• Free margin = Equity − Used margin
• Margin level (%) = (Equity / Used margin) × 100

Watch the margin level figure on your trading platform. When it falls toward 50%, you’re approaching ASIC’s close-out trigger and the broker will start liquidating positions.

What margin is, in plain terms

Margin is what you put down to open a leveraged trade. The broker provides the rest of the position size, secured by your account equity.

A simple example. You want to open a EUR/USD position worth AUD 30,000. EUR/USD is a major pair, so under ASIC’s Product Intervention Order it takes the major-pair cap. The broker requires you to post AUD 1,000 of margin (AUD 30,000 divided by 30). You commit AUD 1,000 from your account balance, the broker carries the AUD 29,000 of position exposure on your behalf, and you keep the full P&L on the AUD 30,000 notional.

That AUD 1,000 isn’t a payment. It’s locked. While the position is open, you can’t withdraw it, you can’t use it to open another trade, and you can’t move it. It’s collateral. When you close the position, the AUD 1,000 is released back to your free balance, plus or minus the P&L on the trade.

Margin is not a fee, not a charge, not interest. The fee structure on a CFD account is the spread, commission and overnight financing. Margin is separate from all of those.

To see the requirement for your own pair and position size, with the ASIC cap for each asset class applied automatically, use our forex margin calculator.

Why brokers require margin

Margin protects the broker against your losses on a leveraged trade. If you’ve put up AUD 1,000 of margin to control AUD 30,000 of EUR/USD, and the trade moves AUD 1,000 against you, the broker is now carrying the full risk on the remaining position. ASIC’s close-out rule (described below) is the regulatory backstop that limits how far this can go.

The system works because retail accounts are diversified across hundreds of clients with offsetting positions, and brokers hedge the net exposure they carry. Your AUD 1,000 of margin is one piece of the broker’s overall risk book.

Initial margin and maintenance margin

Two margin figures matter on every active CFD account.

Initial margin

Initial margin is the deposit required to open the position. It’s calculated as:

Initial margin = Position size / Leverage ratio

ASIC’s PIO sets maximum leverage by asset class for retail clients. Australian retail traders are capped at 30:1 leverage on major forex pairs, with lower limits on every other asset class and margin close-out at no less than 50% of initial margin. Our ASIC regulation guide sets out the full tier ladder.

Maintenance margin and ASIC’s 50% close-out rule

Once a position is open, the broker monitors your account equity against the initial margin used. ASIC’s PIO sets a hard rule for retail clients:

The broker must start closing your positions by the time your account equity falls to 50% of the total initial margin used across all open positions.

The floor isn’t broker discretion. It’s regulatory. Pre-PIO (before March 2021), brokers set their own close-out levels, typically 20 to 40%. Some retail accounts could ride positions all the way to 5% margin level. The PIO replaced that variability with a uniform 50% minimum across every ASIC-regulated retail account; a broker may set its own trigger higher, never lower.

The maths. If you’ve committed AUD 1,000 of initial margin across open positions, the broker is required to start liquidating by the time your equity drops to AUD 500. The broker closes positions in order of largest unrealised loss first, until the close-out condition is no longer met or the account is flat.

Negative balance protection

The other half of the retail protection package. ASIC mandates that retail accounts cannot go into negative equity. If a market gap or extreme move pushes your equity below zero, the broker absorbs the difference. You can’t owe the broker more than what’s in your account.

Negative balance protection works alongside the 50% close-out rule. Together they cap retail downside at “lose your deposit but no more”. This protection does not extend to wholesale (professional) clients, who can be required to top up after a negative-equity event.

Reading your trading platform, equity, free margin, margin level

Whether you’re on MT4, MT5, cTrader, TradingView or a proprietary platform like CMC’s Next Generation, your account summary will show four numbers. Knowing what each one means is the difference between an informed trader and one who learns the hard way.

The equity figure is the one to live by. It updates tick by tick as your positions move. When equity drops toward 50% of used margin, your margin level percentage approaches 50%, and the close-out trigger with it.

A few example margin level readings:

• 300%+, comfortable. Plenty of cushion against adverse moves.
• 150 to 200%, trade is moving against you but you’re not at risk yet.
• 100%, equity equals used margin. Not yet at close-out, but the remaining buffer is thin.
• 50% and below, ASIC’s close-out rule is actively triggering. The broker is liquidating positions.

Different brokers display this slightly differently. Some show “margin level %” directly. Some show “free margin” and let you compute the percentage. Some send push notifications, emails or in-platform warnings as you approach the threshold.

Worked example, AUD 1,000 deposit, EUR/USD 0.1 lot at the retail cap

Walk through one full position to see how the numbers move in practice.

You deposit AUD 1,000 into an ASIC-regulated retail account. You open one mini lot (0.1 standard lot, 10,000 units of base currency) of EUR/USD at 1.0850.

Position size and margin

A mini lot is 10,000 EUR. At 1.0850, that’s USD 10,850 of notional exposure. Converted at AUDUSD 0.65 (illustrative rate), that’s roughly AUD 16,690 of position size in AUD terms.

Initial margin = AUD 16,690 / 30 = AUD 556

So opening the trade locks AUD 556 of your AUD 1,000 deposit. Free margin remaining is AUD 444.

Your account summary at the moment of trade entry:

• Balance: AUD 1,000
• Equity: AUD 1,000 (no unrealised P&L yet)
• Used margin: AUD 556
• Free margin: AUD 444
• Margin level: 1,000 / 556 × 100 = 180%

180% is comfortable. You’ve got close to twice your used margin in equity.

Adverse move

Now suppose EUR/USD moves against you by 100 pips, to 1.0750. On a 10,000-unit position, one pip is worth USD 1, so 100 pips is USD 100 of unrealised loss. At AUDUSD 0.65, that’s roughly AUD 154.

Updated account summary:

• Balance: AUD 1,000
• Equity: AUD 846 (AUD 1,000 minus AUD 154 unrealised loss)
• Used margin: AUD 556
• Free margin: AUD 290
• Margin level: 846 / 556 × 100 = 152%

You’re still well above the close-out threshold. Equity would need to drop to AUD 278 (50% of used margin) for the close-out to trigger.

Approaching close-out

If EUR/USD continues against you to 1.0670, that’s roughly 180 pips of total adverse movement, or AUD 278 of unrealised loss.

• Balance: AUD 1,000
• Equity: AUD 722
• Used margin: AUD 556
• Free margin: AUD 166
• Margin level: 722 / 556 × 100 = 130%

Still not at close-out. The close-out fires when equity hits AUD 278, which is at roughly 470 pips of adverse movement (AUD 722 of loss).

EUR/USD moves 60 to 100 pips on a normal day. A 470-pip move requires a sustained directional trend over multiple sessions, usually with an event-driven shock along the way (an NFP miss, an RBA rate surprise, a geopolitical headline). It’s possible but rarely happens inside a single day.

The lesson here. With AUD 556 of margin on a single mini lot, your account can absorb meaningful adverse moves before close-out triggers. Trouble starts when traders open multiple positions or larger position sizes that consume more of the available margin. With AUD 1,000 of margin used (the maximum at the major-pair cap on a AUD 1,000 account), close-out triggers at AUD 500 of equity, which is half of your account balance gone.

Margin call vs stop-out, what’s changed since the PIO

Pre-PIO (before March 2021), Australian brokers operated a two-stage process:

• Margin call: a warning sent when account equity dropped to a broker-set level (commonly 80 to 100% margin level), asking the trader to deposit more funds or close positions
• Stop-out: the level at which the broker actually started closing positions, typically 20 to 50% margin level

Different brokers used different numbers, and the warning thresholds were broker discretion.

The PIO replaced this variability with a single rule. ASIC sets the close-out floor at 50% of initial margin (margin level 50%) for retail clients: every ASIC-regulated broker offering CFDs to retail must close out by that level at the latest, and may set its own trigger higher. Brokers can still send warning notifications above the close-out level (push, email, in-platform) but the minimum close-out point is now regulated rather than broker-set.

Broker variations on margin notification

Even though the close-out level is uniform, brokers differ in how they notify you that you’re approaching it.

Broker	Margin notification method	Close-out level
CMC Markets	Email + in-platform	50% of initial margin (ASIC)
IG Markets	Email + in-platform + push	50% of initial margin (ASIC)
Pepperstone	Email + push (MT4/MT5/cTrader)	50% of initial margin (ASIC)
IC Markets	Email + push	50% of initial margin (ASIC)
eToro	In-app + email	50% of initial margin (ASIC)
Plus500	In-platform + email + push	50% of initial margin (ASIC)

Confirm notification preferences in your broker’s account settings before placing leveraged trades. Push notifications on mobile are the fastest channel. Email can lag by minutes.

Retail margin rules are identical across every ASIC broker, so the real differences sit in pricing and platforms; that comparison starts with the top ASIC-regulated brokers we rank.

Common margin mistakes Australian traders make

Confusing initial margin with the only money at risk

The AUD 556 of initial margin in our worked example isn’t your maximum loss. It’s the deposit required to open the position. Your full account equity is at risk on the trade, capped at zero by negative balance protection. Many new traders see “initial margin: AUD 556” and assume that’s the maximum they can lose on the trade. It isn’t.

Over-using free margin to add positions

If you’ve got AUD 444 of free margin remaining, the temptation is to open another position with that capacity. The problem is you’ve already used 56% of your account on the first trade. Adding another doubles your exposure and halves your buffer against close-out. A common rule among professional AU traders is to keep free margin at 50%+ of total balance at all times.

Ignoring used margin across multiple positions

The 50% close-out rule applies to total used margin across all open positions, not per-trade. If you’ve opened five positions each using AUD 200 of margin (AUD 1,000 total), the close-out triggers when total equity falls to AUD 500. A single bad trade in one of the five can push the whole account toward close-out.

Not checking the broker’s notification settings

Push notifications on mobile, email warnings, in-platform alerts. Different brokers default to different combinations. Some default to email only (slowest channel). Some let you configure thresholds (e.g. send a warning at 150% margin level, another at 110%). Set these before you need them.