Leverage and margin: how much of the trade is yours
What you learn in 3 minutesLeverage is the broker letting you control a position larger than your deposit. Margin is the slice of your own money locked while that position stays open. On USD/ZAR at about 18.4100, one standard lot is 100,000 units, so the position is worth roughly R1,841,000. At 1:30 leverage the margin is about R61,367. At 1:500 it is about R3,682. Same trade, very different amount of your money held aside.
One lot of USD/ZAR at two leverage levels
| Step | Amount | Note |
|---|---|---|
| Position size | 1 standard lot = 100,000 USD | Standard lot definition |
| USD/ZAR price used | 18.4100 | Example rate only; live rates move |
| Position value in rand | R1,841,000 | 100,000 x 18.4100 |
| Margin at 1:30 | R61,367 | R1,841,000 / 30, rounded to the rand |
| Margin at 1:500 | R3,682 | R1,841,000 / 500, rounded to the rand |
| Difference held aside | R57,685 | R61,367 minus R3,682 |
Margin requirements vary between brokers and can change with market conditions. A broker may round the figure, add a spread, or charge commission or a swap on top. The rand value of a USD position also shifts as USD/ZAR moves.
The mistake people make here
The common mistake is treating low margin as low risk. At 1:500 the deposit needed looks small, so people open a position far bigger than their account can absorb. A move against the trade is measured on the full position, not on the margin. A 1% move on R1,841,000 is about R18,410, which is many times the R3,682 margin. The safer habit is to decide the rand risk first, then choose the smallest position that fits it, and to check the margin requirement with your own broker before opening anything.Check yourself
USD/ZAR is at 18.4100. What is the margin on 0.10 lots at 1:30?
0.10 lots is 10,000 USD. Position value is 10,000 x 18.4100 = R184,100. Margin is R184,100 / 30 = about R6,137.
Using the same price, what is the margin on 0.10 lots at 1:500?
R184,100 / 500 = about R368. The position is the same size; only the amount locked aside changes.