Margin Calculator
Use our comprehensive margin calculator to determine profit margins, stock trading margin requirements, and forex trading margin requirements. Simply enter your values to get instant results.
Margin Calculator
Calculate the profit margin of a product or service. Enter any two values to calculate the rest.
What is Margin?
Margin is a term with multiple meanings in finance. In business, profit margin refers to the difference between revenue and cost expressed as a percentage of revenue. In trading, margin is the collateral that an investor has to deposit to cover credit risk.
This calculator helps you work with different types of margins: profit margin in business, margin requirements for stock trading, and margin needs for forex trading.
Margin Calculation Formulas
Profit Margin Formula
Profit margin is calculated by dividing the profit by revenue, then multiplying by 100 to get a percentage:
Markup Formula
Markup is calculated by dividing the profit by cost, then multiplying by 100 to get a percentage:
Stock Trading Margin Formula
The required margin is calculated by multiplying the stock price by the number of shares and the margin requirement percentage:
Forex Margin Formula
The required margin for forex trading is calculated by dividing the position size (units × exchange rate) by the leverage ratio:
Why Margin Calculations Are Important
Understanding margins is crucial for businesses, investors, and traders. For businesses, profit margin helps measure profitability and financial health. For investors and traders, margin requirements determine how much capital is needed for leveraged trading.
By calculating margins accurately, you can:
- Make informed business decisions based on profitability
- Determine appropriate pricing strategies
- Plan capital requirements for trading activities
- Manage risk by understanding leverage implications
Understanding Different Types of Margins
The term 'margin' has different meanings depending on the context. It's important to understand these differences to use the right calculation for your needs.
Our calculator provides tools for the two most common types of margin calculations:
Profit Margin
Used in business to measure the percentage of revenue that exceeds costs. Higher profit margins indicate more efficient operations and better pricing power.
Trading Margin
Used in financial markets to determine the amount of collateral needed to open and maintain leveraged positions in stocks, forex, or other securities.
How to Use This Calculator
- Select the appropriate tab for your calculation needs: Profit Margin, Stock Trading Margin, or Forex Margin.
- Enter the required values in the input fields.
- Click the Calculate button to see your results.
- If needed, download the results as a CSV file using the download button.
You can reset the calculator at any time to perform a new calculation.
Frequently Asked Questions
What is the difference between margin and markup?
Margin is calculated as (Revenue - Cost) / Revenue, while markup is calculated as (Revenue - Cost) / Cost. Margin shows profit as a percentage of revenue, while markup shows profit as a percentage of cost.
Why is profit margin important for a business?
Profit margin is a key indicator of a company's financial health, showing how efficiently it converts revenue into profit. Higher margins generally indicate better operational efficiency and pricing power.
What is a good profit margin?
A good profit margin varies by industry. Retail businesses might have margins of 2-3%, while software companies might have margins of 15-20% or higher. It's best to compare your margin to industry benchmarks.
How does margin trading work in the stock market?
Margin trading allows investors to borrow money from a broker to purchase more stock than they could with their available cash. The margin requirement (typically 50% in the US) determines how much of their own money investors must provide.
What is leverage in forex trading?
Leverage in forex trading allows traders to control large positions with a relatively small amount of capital. For example, with 100:1 leverage, a trader can control a $100,000 position with just $1,000 of their own money. While this amplifies potential gains, it also increases potential losses.