Margin vs Used vs Free: Reading the 2026 Broker Statement

Most retail traders in 2026 know their account balance but cannot read the rest of the broker statement, and that gap is exactly where margin calls happen. The hook is straightforward: equity, not balance, drives margin, and the difference between the two is the floating profit or loss on every open position.

The four terms, defined for clarity

Broker statements typically show four numbers that look similar but mean different things. Conflating them is the most common cause of avoidable margin calls.

• Balance is the realised P&L from closed trades plus deposits and withdrawals. A trader who closed a winning trade at +$500 has a balance $500 higher than before the trade.
• Equity is balance plus the floating (unrealised) profit or loss on open positions. A trader with $10,000 balance and +$300 floating on an open trade has $10,300 equity.
• Used Margin is the collateral locked against open positions. It is calculated as position size divided by leverage — a $100,000 position at 30:1 has $3,333 of used margin.
• Free Margin is equity minus used margin. It represents the buffer available to open new positions or absorb additional losses. A trader with $10,300 equity and $3,333 used margin has $6,967 free margin.

The crucial distinction: brokers calculate margin calls on equity, not balance. A trader sitting at break-even on closed trades with $800 of floating loss on an open position has $9,200 equity — and the margin call level is calculated against that $9,200, not the $10,000 balance.

The margin level percentage

The most informative single number on the statement is margin level:

Margin Level = (Equity / Used Margin) × 100

A trader with $10,000 equity and $2,000 used margin has a 500% margin level. A trader with $8,000 equity and $5,000 used margin has a 160% margin level. The first account is healthy; the second is close to the 100% margin call threshold at most brokers.

Why floating profit is not safe collateral

Floating profit counts toward equity and therefore toward margin level. That is the good news. The bad news is that floating profit is also volatile — a position that adds $1,000 of equity in the morning can subtract $1,200 by the afternoon. Several brokers publish margin level based on the higher of balance or equity at the daily reset, which means a trader's margin level can shift without any change in position size.

The prop-firm variant of this is even sharper. FTMO's daily loss limit at midnight CE(S)T uses the higher of balance or equity as the baseline. A swing trader with $3,000 of floating profit at midnight sees the daily breach level tighten by $3,000. When the position reverses during the Asian session, the floating profit disappears, the daily limit has moved up, and the loss breaches the new threshold. The trade is closed without appeal.

Why balance alone misleads

A trader focused on balance sees a $10,000 account and concludes they are safe. They may not see that $8,000 of equity and $5,000 of used margin puts the account at 160% margin level. Adding another trade at the same size drops used margin to $7,143, and margin level falls to 112% — already inside the caution zone. The trader believes they have room; the broker's risk engine knows they do not.

Reading the statement at the right cadence

Three checks make the difference:

1. Before opening a new position, calculate the post-trade margin level using current equity, not balance.
2. Before known news events, recalculate margin level assuming the worst-case adverse move in the open position.
3. At the broker's daily reset, log the margin level so the next session's calculation is anchored to a known baseline.

None of these checks require a sophisticated tool. A pocket calculator and the broker's published margin schedule are sufficient. The trader's advantage is in applying them consistently.

Latest YouTube lens

What Is Free Margin in Forex 2026 — Volity walks through the equity, balance, used margin and free margin distinction with worked examples. The video is third-party; the broker's statement and the published margin schedule are the controlling source.

Sources

• TopRatedFX — What Is a Margin Call 2026
• CompareForexBrokers — Forex Margin Explained for AU Traders 2026
• Pipstone Capital — How Much Free Margin Should You Keep

Checked September 2026. Margin definitions and calculation methods are broker-standard across ESMA-regulated retail brokers but can differ at offshore firms. The figures above assume a 30:1 retail framework; professional clients face different requirements.