Leverage Calculator

Leverage vs. margin: what is the difference

Leverage and margin describe the same relationship from opposite ends. Leverage is the multiplier on your capital; margin is the cash actually set aside to open and hold the trade. They are linked by a single formula:

Required margin = Position size / Leverage

Suppose you want to take a 50,000 position in a currency pair and your account allows 20x leverage. The margin needed is 50,000 / 20 = 2,500. Drop the leverage to 10x and the same position now requires 5,000 of margin. Higher leverage frees up cash but leaves less buffer between your entry and the point where the broker closes you out. Lower leverage ties up more capital but gives the trade room to breathe.

How much leverage should you use?

There is no single correct figure. The ceiling depends on the market: regulated forex brokers cap retail accounts at 30:1 in the EU and 50:1 in the US (offshore brokers advertise 100:1 and more), stock margin accounts give 2:1 to 4:1, and crypto exchanges go up to 100x — the sections below cover stocks and crypto in detail.

Higher leverage magnifies both gains and losses and shrinks the distance between your entry and liquidation. Most consistent traders size from risk first: they decide what a losing trade may cost, then back into a position size, and only afterward check what leverage that implies. The available maximum is a limit, not a target.

Worked example: profit and return on margin

Say you commit 1,000 of margin and open at 10x leverage. Your notional exposure is:

Notional = Margin x Leverage = 1,000 x 10 = 10,000

The price then moves 3% in your favour. The gain is calculated on the full notional, not on your margin:

Profit = Notional x 3% = 10,000 x 0.03 = 300

That 300 profit is measured against the 1,000 you actually put up, which gives the return on margin:

Return on margin = Profit / Margin = 300 / 1,000 = 30%

A 3% price move turned into a 30% return on the capital deployed, exactly the 10x multiplier at work. Reverse the price move and the same trade loses 300, a 30% hit to your margin. The calculator above runs this in both directions so you can stress-test a setup before risking anything.

Liquidation and risk

Leverage shrinks the adverse move it takes to wipe out your margin: roughly 100% divided by your leverage (the crypto section below has the exact distances). The calculator above shows the liquidation price for any entry, direction, and leverage.

This is why leverage should follow your stop, not lead it. Decide the price at which you are wrong, size the position so the loss at that stop stays within your risk budget (commonly 0.5% to 2% of equity), and confirm the implied leverage leaves comfortable room above the liquidation price. Treating leverage as the starting point instead of the result is the fastest way to be closed out by a move you would otherwise have survived.

Leverage in crypto: 20x, 50x, 100x

Crypto exchanges offer the highest leverage of any market. Perpetual futures (contracts with no expiry date) go up to 100x on major coins, and some venues advertise 125x. The math in the calculator above stays the same — only the distances get extreme:

Bitcoin regularly moves 1% within an hour, so a 100x position can be liquidated by ordinary noise. Crypto also adds a cost that stocks and forex do not have: perpetuals charge a funding fee (a small payment between longs and shorts, usually every 8 hours), and it is charged on the full notional — at high leverage it eats margin fast. This is why most consistent crypto traders stay in the 3x–10x range even when 100x is available.

Leverage on stocks: how margin accounts work

Stock leverage is much smaller and works through a margin account — the broker lends you money against the cash and stocks you already hold. In the US, Regulation T allows 2:1: with 10,000 of cash you can hold 20,000 of stock. Pattern day traders (accounts flagged for frequent intraday trading, minimum 25,000 of equity) get up to 4:1 during the day.

Two differences from crypto to keep in mind. The borrowed cash accrues interest daily, so a leveraged stock position has a holding cost even when the price goes nowhere. And instead of instant liquidation you get a margin call: the broker asks you to add funds, and sells your positions if you do not. To find your effective stock leverage, enter the position value and your own cash in the calculator above.