Simply put, Free Margin is the amount of cash in your account that is available for trading. Say, that your account Balance is 10,000 US Dollars, and you chose a leverage of 1:100. If you do not have any open positions, then the Free Margin is 10,000 US Dollars.

Let’s take it one step further.

Now, say that your Balance is still 10,000 US Dollars, but you also bought 1 lot of EURUSD at 1.1750.

If the current exchange rate of the EURUSD is at 1.1700, then you have a floating loss of

100,000 x (1.1750 – 1.1700) =

100,000 x (0.0050) = 500 US Dollars

The required Margin is calculated as 100,000 x 1/100 x 1.1750= $1,175

So, the available cash in your account for trading is

Balance – Margin Used +- floating Profit/Loss=

10,000 – 1,175 – 500= 8,325 US Dollars

Or

If you prefer

Free Margin = Balance +- floating Profit/Loss – Margin Used = Equity – Margin Used