Leverage Calculator
Calculate the margin required to open a leveraged trading position and estimate how price changes affect your profit, loss and return on margin.
What is trading leverage?
Leverage allows traders to control a position larger than the amount of capital initially committed as margin.
For example, 5× leverage means a trader can control a $5,000 position using $1,000 of initial margin, assuming a 20% initial margin requirement.
How to calculate required margin
Required initial margin is calculated by dividing the position's opening notional value by the leverage multiple.
Required Margin = Position Value ÷ Leverage
How leverage affects trading profits
Leverage magnifies percentage gains and losses relative to the margin committed. It does not change the gross dollar profit or loss on a position of a fixed size.
For a long trade, profit or loss is calculated by subtracting the entry price from the exit price and multiplying by position size.
For a short trade, the price difference is reversed.
Leverage calculation example
Suppose you buy 20 units at $100 each, creating a $2,000 position.
With 5× leverage, your initial margin is $400.
If the price rises to $110, your gross profit is $200, representing a 50% return on your initial margin.
However, if the price falls to $90, your gross loss is $200, equivalent to 50% of your initial margin.
What is effective leverage?
Effective leverage compares the notional value of a position with the capital supporting it.
Effective Leverage = Position Value ÷ Capital Committed
In this calculator, the selected leverage determines the required initial margin. Actual effective account leverage may differ depending on account equity and other open positions.
Important risks of leveraged trading
Leveraged trading can lead to rapid losses, margin calls and forced liquidation. Losses may exceed initial margin, depending on the product and broker.
The estimated margin after profit or loss is a simplified illustration, not a liquidation or account-equity calculation.
This calculator does not include maintenance margin, liquidation thresholds, fees, spreads, funding costs, interest, taxes or currency conversions.
It assumes a linear-priced instrument where each one-dollar price change per unit produces a one-dollar change in profit or loss.
Results are educational estimates, not financial advice.