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Free margin

Unused margin available to open new trades or absorb losses before a margin call; key buffer for leverage and risk management.

Free margin is the portion of capital in a trading account that is not currently tied up in margin requirements for open positions. It represents the buffer available to absorb losses or to open new trades. In energy markets, where prices can move sharply due to geopolitical events, weather, or supply disruptions, maintaining sufficient free margin is critical. Low free margin increases the risk of margin calls or forced liquidation during adverse price moves. Traders actively manage free margin by adjusting leverage, reducing position sizes, or adding capital. Effective free margin management allows traders to withstand volatility and maintain flexibility during stressed market conditions. From a risk management perspective, free margin is a key indicator of financial resilience and trading capacity. Firms often set internal limits to ensure adequate free margin under stress scenarios.

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