What Is Free Margin in Exness?

Exness calculates free margin using the formula:

Free Margin=Equity−Used Margin\text{Free Margin} = \text{Equity} – \text{Used Margin}Free Margin=Equity−Used Margin

Example Calculation:

1. A trader deposits ₦500,000 into an Exness trading account.
   
2. They open a trade requiring ₦100,000 as margin.
   
3. If their equity remains ₦500,000, then:
   Free Margin=500,000−100,000=400,000\text{Free Margin} = 500,000 – 100,000 = 400,000Free Margin=500,000−100,000=400,000

If the trader’s equity increases due to profit, the free margin increases, allowing them to open more trades. Conversely, if the market moves against them, free margin decreases.

Why Free Margin Matters

1. Prevents Margin Calls and Stop-Outs as margin calls occur if your free margin drops too low, with Exness notifying you that additional funds are needed to maintain open trades, while stop-outs happen if the market moves against your positions and your free margin reaches zero, causing Exness to automatically close some or all trades to prevent further losses.
2. Determines Trading Capacity since free margin indicates how much capital is available for opening new trades, with higher free margin providing more flexibility to take advantage of market opportunities, while low free margin restricts your ability to open new positions.
3. Helps in Risk Management by allowing traders to manage their risk efficiently when keeping a healthy free margin, enabling them to ride out temporary market fluctuations and preventing forced liquidation of positions, with best practices including avoiding over-leveraging your account, using stop-loss orders to protect free margin, and monitoring your margin levels regularly.
4. Enables Smart Use of Leverage for Nigerian traders who often use leverage to maximize potential profits, as higher leverage can reduce the margin required for trades and increase free margin, though excessive leverage can also deplete free margin quickly if trades go against you.
5. Ensures Long-Term Trading Stability by preventing a trading account from being wiped out quickly when free margin is well-managed, allowing Nigerian traders to stay in the market longer and take advantage of profitable opportunities, while low free margin can result in unnecessary liquidations that limit long-term profitability.

1. Monitor Your Free Margin Regularly by keeping track of your free margin in the Exness trading platform (MT4, MT5, or Exness Terminal), checking your Margin Level (%) as a low percentage indicates that you are close to a margin call, and using the Exness Personal Area to review your account balance and trading conditions.
2. Use Leverage Wisely since leverage allows you to control larger positions with less capital, but excessive leverage can deplete free margin quickly and lead to larger losses if the market moves against you, so choose from Exness’s flexible leverage options a level that suits your risk appetite.
3. Avoid Overtrading because opening too many trades at once can quickly reduce free margin, with each trade requiring margin and multiple open trades potentially straining your account balance, so focus on quality trades rather than quantity to maintain a healthy free margin.
4. Use Stop-Loss Orders as a stop-loss helps protect your account by automatically closing trades when losses reach a set limit, preventing unnecessary free margin depletion during volatile market movements, with Exness providing advanced risk management tools to help traders set stop-loss levels.
5. Maintain a Sufficient Account Balance as a well-funded account ensures that you have enough free margin to keep trades open, and if your free margin is too low, you may need to add funds to avoid a margin call, with Exness offering instant deposits and withdrawals that make it easy to fund your account when necessary.
6. Diversify Your Trades by avoiding putting all your free margin into a single high-risk trade, spreading your trades across different assets (forex, commodities, indices, etc.) to balance risk, with Exness providing access to multiple financial instruments to help traders diversify effectively.