Leverage and margin: how much of the trade is yours
What you learn in 3 minutesA trader once opened a USD/INR position with ₹10,000 and was surprised when the platform refused the order. The reason was margin: the deposit was not large enough for the position size. Leverage sets how large a position a deposit can hold. Margin is the part of the money locked against it while the trade stays open. This lesson shows how both numbers are calculated in rupees.
Margin on one standard lot at two leverage levels
| Step | Amount | Note |
|---|---|---|
| Trade size | 1 standard lot USD/INR | One standard lot is 100,000 units of the base currency. |
| Price used | 83.2500 | The USD/INR rate in this example. |
| Notional value in rupees | ₹8,32,500 | 100,000 x 83.2500 = 8,32,500. |
| Margin at 1:30 leverage | ₹27,750 | 8,32,500 / 30 = 27,750. |
| Margin at 1:500 leverage | ₹1,665 | 8,32,500 / 500 = 1,665. |
| Value of one pip | ₹10 | 100,000 x 0.0001 = 10. |
Brokers may round margin, add a buffer, or charge a spread and swap on top. Leverage limits and margin rules vary between brokers and can change.
The mistake people make here
The common mistake is to treat high leverage as free buying power. A trader sees that ₹1,665 controls a position worth ₹8,32,500 and opens the largest size allowed. A small move against the position then uses a large share of the deposit. The correct approach is to decide the risk in rupees first, then choose a position size that fits, and treat leverage only as a limit set by the broker.Check yourself
At 1:50 leverage, what margin is needed for 0.50 standard lots of USD/INR at 83.2500?
0.50 lots is 50,000 units. 50,000 x 83.2500 = ₹41,62,500. 41,62,500 / 50 = ₹83,250 margin.
If one pip on one standard lot is ₹10, what is the pip value on 0.20 lots?
0.20 x ₹10 = ₹2 per pip.