Margin is how much of your account's equity you use to open a position. When it comes to leveraged positions, margin is often given as a percentage of the position's market exposure.

For example, if you put R500 into a trade and the leverage is 7x, your risk is R3,500. R500 or 14,3%, is the margin.

Margin is the amount of money you need to open a position and leverage is the number of times your exposure is multiplied.

If you want to work out the margin, calculate how big your position will be and divide that number by the higher number, in the leverage ratio.

For this example, we have a trader, let’s call her Jane.

Jane wants to trade R35,000 with 7:1 leverage.

So, the margin formula would be: R35,000 divided by 7 = R5,000.

If the leverage was 5:1, Jane would have to put down R7,000 to manage the same size position. In this case, the formula would be R35,000 / 5 = R7,000.

Basically, this means that you would work out the margin the following way:

Size of position/ the larger number in the ratio = the margin.

When you buy on margin, the size of your deposit will depend on how much leverage the broker gives you and what the trading terms are. The term for this payment is "initial margin." Margin requirements can be very different based on things like the type of asset, the market, and the amount of risk involved.