Risk management

Margin Trading: How It Works

Astron Team · 09/24/2026 · 4 min read

Trading with margin means opening a position larger than the amount you actually put up as collateral, using capital borrowed from the broker or from the mechanics of the traded instrument itself. It's a powerful tool, capable of amplifying both gains and losses in the same proportion — and it's exactly this second part that tends to be underestimated by beginners.

This article explains how margin works, how to calculate the amount needed to open a position, what a margin call is, and how to size risk consciously before trading leveraged.

What margin is and what leverage is

Margin is the amount you need to deposit as collateral to open a position; leverage is the ratio between the position size and that margin. A leverage of 10:1, for example, means that, with R$ 1,000.00 of margin, you can control a position of R$ 10,000.00. The profit or loss, however, is calculated on the total position value, not just on the deposited margin.

A numeric example of a leveraged trade

Suppose a R$ 10,000.00 position opened with R$ 1,000.00 of margin (10:1 leverage). If the asset rises 5%, the gain on the total position is R$ 500.00 — that is, a 50% return on the deposited margin. If the asset falls 5%, the loss is also R$ 500.00, equal to half of the entire initial margin. This is the nature of margin: it multiplies the trade's percentage result relative to the capital actually put up, both on the upside and the downside.

What a margin call is

When losses on a leveraged position eat up a good part of the deposited margin, the broker may issue a margin call, requiring an additional deposit to keep the position open. If that deposit isn't made, the position can be closed automatically to prevent the loss from exceeding the capital available in the account. In the previous example, an additional drop that pushed the loss to R$ 900.00 would leave very little safety margin before the broker steps in.

Why margin requires more care, not less

• The percentage move needed to wipe out the margin is much smaller than in an unleveraged trade — in the 10:1 example, a 10% drop in the asset would already be enough to consume the entire initial margin.
• Leveraged trades amplify the emotional effect of every swing, since the result in currency terms moves much faster than in a position without margin.
• Costs like interest on the borrowed amount can build up in positions held for several days, reducing the net result even on winning trades.
• The speed at which a leveraged position can be liquidated leaves little room to correct a mistake mid-trade, unlike unleveraged positions, which usually give more time to react.

How to size risk in margin trades

The most commonly used practical rule is to set the maximum risk relative to the account's total capital, not relative to the leveraged position size. If the risk rule is 1% of capital per trade, on a R$ 10,000.00 account that means risking at most R$ 100.00, regardless of whether the leveraged position is worth R$ 5,000.00 or R$ 50,000.00 — the stop loss should be calculated to respect this R$ 100.00 loss limit, adjusting position size according to the stop's distance. This adjustment is what actually controls the risk, far more than the leverage ratio offered by the broker.

Using margin responsibly

Leverage isn't good or bad by itself — it's a tool that requires risk management proportional to its potential to amplify results. Before trading with margin, it's worth understanding exactly what leverage the chosen platform offers for each instrument, calculating the currency risk of each trade before opening it, and testing the behavior of leveraged positions on a demo account, whether on Astron or another platform, since the risk of losing all deposited capital is real and can happen much faster than in unleveraged trades.