Separating leverage, margin, equity and available funds

DailyForex explains leverage as the relationship between the size of a market position and the trader’s own account funds. Margin is the amount required to support the position. Equity reflects account value including current profit or loss, while free margin describes funds remaining available after existing commitments.

The guide also examines pip values, which connect a currency pair’s quoted movement with the monetary change in a position. A pip value depends on the instrument, position size and account-currency conversion. The same chart movement can therefore produce very different financial results in different accounts.

The source’s central conceptual distinction is between leverage offered by an intermediary and leverage actually used. This summary does not quote a single worldwide maximum or prescribe a preferred ratio. Applicable limits and close-out conditions depend on the provider, product, jurisdiction and customer classification.