In plain English
What Free margin means
Free margin is usually calculated as equity minus used margin. It changes continuously because equity changes with unrealized profit or loss. When free margin gets too low, a broker may stop new orders, issue a margin call or close positions according to its rules.
Why it matters
Free margin is one of the clearest early-warning figures in a leveraged account. It shows how much room remains before the account reaches a maintenance threshold. Traders watch it because a position that looks acceptable at entry can become fragile as prices move.
Example
If equity is $8,000 and used margin is $2,500, free margin is $5,500. If an open loss reduces equity to $3,500, free margin falls to $1,000, even if the positions themselves have not changed.
Quick answers
Common questions
Is free margin the same as withdrawable cash?+
No. It is a risk buffer inside the trading account, not necessarily cash you can withdraw at that moment.
Why does free margin change when I do nothing?+
Because unrealized profit or loss changes account equity, which changes free margin.
Sources