Free margin

It is equity less used margin, where equity is the account balance plus the unrealised profit or loss on everything currently open. Because that unrealised figure is revalued on every tick, free margin moves continuously even when no order is sent and nothing is closed. It is a derived number rather than a pot of money, and it is not the same as cash available to withdraw.

Its role is as a buffer. Losses on open positions are calculated on the full contract value and are not limited to the amount deposited, and each adverse tick reduces equity, which reduces free margin. When equity falls far enough relative to the collateral held, the margin level, expressed as a percentage, reaches the stop out level published by the provider and positions become liable to be closed under its stated rules. Favourable moves work in exactly the same direction and to exactly the same degree, raising equity and with it free margin.

The most consequential misreading is treating a large free margin figure as a large amount of money. It includes unrealised profit on positions that are still open, and that profit can reverse, taking the buffer with it. Providers also differ on the detail: whether any credit granted on an account counts towards equity for margin purposes is a house convention rather than a standard, and the margin requirement behind used margin is set per instrument and can be raised, which reduces free margin without any price having moved.