Leverage & Margin Lab
A small move in the market becomes a much bigger move on your margin.See by how much.
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Sign inThis Lab shows how leverage works on a futures position. You do not pay the full contract value. You deposit a smaller margin as a cushion, and the same rupee move on the whole contract lands entirely on that smaller margin. You set the contract value, the margin required and a move in the underlying, and the Lab shows the leverage and what the move does to your margin.
How to use this Lab
- Set the position size, which is the full contract value, from ₹50,000 to ₹5,00,000.
- Set the margin required as a percentage of it, from 5 to 25 percent.
- Set the move in the underlying, from minus 10 to plus 10 percent.
- Read your margin and the leverage, then the rupee move on the contract, and the sentence that turns the market move into a move on your margin.
What to notice
- Leverage is the inverse of margin
- A smaller margin means higher leverage. At 15 percent margin the leverage is about 6.7 times, and at 10 percent it is 10 times. Move the margin slider and watch the number change.
- Losses arrive faster too
- Leverage does not only make gains and losses bigger. It makes them arrive faster. Move the market slider to a negative value and see how quickly a modest fall reaches a large share of your margin.
- The real question
- Before entering a leveraged position, the question is not only whether you can afford to enter. It is whether you can afford to be temporarily wrong, and whether you can actually exit if you need to.
Three runs of the Lab (hypothetical)
A ₹1,00,000 contract with 15 percent margin means ₹15,000 deposited, about 6.7 times leverage. A 1 percent rise gives ₹1,000, which is about 6.7 percent on your margin.
A 5 percent fall takes ₹5,000, which is about 33 percent of your margin.
A 10 percent fall takes ₹10,000, which is about 67 percent of your margin. With margin at 10 percent instead, the same 10 percent fall takes all of it: 100 percent.
What this Lab does not show
- The Lab shows one move at a time. Real positions are marked to market every day, and a broker can ask for more margin or close the position before the move is over.
- The margin percentage is set by the exchange and the broker and changes over time. The values here are examples, not the current requirements for any contract.
- It does not include brokerage, taxes or charges, and it does not model gaps or a halted market.
- It does not recommend any position or amount. Maetis does not give trading advice.
Common questions
- What is leverage in simple words?
- Controlling a large position with a small deposit, so a given move in the market is a much larger move on the money you put in.
- What is margin?
- Money set aside as a buffer to hold a leveraged position. It is not extra spending power.
- How do I calculate leverage from margin?
- Divide 100 by the margin percentage. A 20 percent margin gives 5 times leverage.
- Can I lose more than my margin?
- Yes, in a very large or fast move, since the position is larger than the margin. This is why leverage needs care.