The leverage your broker offers and the leverage you actually use are two different things. This calculator shows your effective leverage – the real size of your positions compared with your account – and how much a market move would cost you.
Leverage Calculator
Your effective leverage, margin used and how much a market move hurts.
Results are estimates for information only, not financial advice. Trading on leverage carries a high risk of losing money.
Broker Leverage Vs Effective Leverage
Broker leverage, such as 1:30, sets how much margin you must put up: at 1:30 a $30,000 position needs $1,000. It says less about how much risk you are taking.
Effective leverage is the total value of your open positions divided by your account equity. With $10,000 in your account and $50,000 of open positions, your effective leverage is 5x, whatever the broker allows. This is the number that decides how hard a market move hits your account.
How To Use The Calculator
- Choose your account currency.
- Enter your account equity – your balance plus or minus any open profit or loss.
- Enter the total value of your open positions. Add up the full value of every position, not the margin. One standard lot of EUR/USD is worth about 100,000 euros.
- Choose your broker’s leverage. It is set to the usual retail limit for your country.
The calculator shows your effective leverage, the margin used, your margin level, the free margin, what a 1% move against you costs, and the move that would wipe out the account.
The Formulas
Effective leverage = total position value ÷ equity.
Margin used = total position value ÷ broker leverage. Margin level = equity ÷ margin used × 100%.
Move that wipes out the account = 100% ÷ effective leverage. At 5x, a 20% move against you would cost your whole account.
Why It Matters To Traders
High broker leverage is not dangerous on its own – trading too big is. Two traders with the same 1:30 account can take completely different risks: one with 2x effective leverage, the other with 25x.
Many professional traders keep their effective leverage low, often below 5x across all positions. Watching this number helps you avoid margin calls, where your broker closes positions automatically because your margin level has fallen too low.
Tips
- Check your effective leverage after every new position, especially when several trades move together, such as two USD pairs.
- Brokers usually start closing positions when the margin level falls to 50% or below. Check your broker’s stop-out level.
- Use the margin calculator for a single trade and the position size calculator to size it from your risk.
Related Trading Calculators
Alternatively, see our full suite of free online trading calculators.
DayTrading.com’s free trading calculators are for education and planning only and are not financial advice. Trading with leverage is high risk, and you could lose any money you invest. Trade responsibly.