i What this calculator does
Leverage is usually described as a ratio. This calculator describes it as a number of nights. Enter the instrument, your leverage and your broker's stop-out level, and it works out the adverse daily move that would close the position, then uses the instrument's typical daily volatility to estimate how many trading days a year a move that large occurs. The answer is how often you would wake up to a margin call if you held a full-size position overnight.
The volatility figures are long-run annualised averages for each instrument and can be overridden. Real markets have fatter tails than the model assumes, so the frequencies are a lower bound, which makes the result a kindness. It belongs next to the article on why leverage is dangerous and the margin call calculator.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How leverage becomes nights
A position at 30x leverage puts up 3.33% of its value as margin. With a 50% stop-out level the broker closes the position once the loss reaches half of that, 1.67% of the position value. For USD/ZAR, which moves about 0.94% on a typical day, a 1.67% adverse move is a 1.8 standard deviation day, and a normal distribution puts that at about 3.6% of trading days, or nine a year. Those are the nights. The chart repeats the sum across leverage levels so you can see where the curve bends.
Why the model is generous
Daily returns are not normally distributed. Currency and index moves of four or five standard deviations, which the normal distribution treats as once-a-century events, happen every few years; the rand lost 9% in a day in December 2015 and Bitcoin has had several 20% days. Weekend gaps are not daily moves at all: the position opens on Monday already through the stop-out. So the frequencies here are a floor. If the floor already says monthly margin calls, the ceiling does not matter.
What to do with the result
The two levers are leverage and position share, and they multiply. The same 30x position using 20% of the account instead of 100% survives a five times larger move, because the untouched 80% absorbs losses before the stop-out. That is what sizing by risk per trade achieves in practice, and why experienced traders describe their exposure as a percentage of the account rather than as a leverage ratio. For the mechanics of the close itself, read how a margin call works.
Spotted an outdated figure? If a rate, limit or formula in this calculator no longer matches its source, email us the page and the source. A material correction is dated on the Updates Log.
Frequently asked questions
Where do the volatility defaults come from?
They are long-run annualised figures for each instrument rounded to the nearest percent: roughly 15% for USD/ZAR and gold, 7% for EUR/USD, 18% for the S&P 500 and the JSE Top 40, and 60% for Bitcoin. Volatility changes over time, which is why the override field exists.
Why does Bitcoin use 365 days?
Because it trades every day. Its annual volatility is spread over 365 days rather than 252, and a holder is exposed on weekends when the other instruments are closed.
What does "share of account used as margin" mean?
How much of your account the position's margin takes up. At 100% the position is as large as your margin allows and any loss eats straight into required margin. At 20%, the other 80% of the account is free equity that absorbs losses first, so the move needed for a margin call is five times larger.
Is the stop-out level always 50%?
No. South African CFD brokers commonly use 50% of required margin, but some use 20% or 100%, and the level is in your account terms. Enter yours.
Why is the "either direction" figure double?
The margin call only happens on moves against you, but which direction that is depends on whether you are long or short. Doubling shows how often the market makes a move of that size at all.
Does a lower frequency mean the position is safe?
It means a daily move is unlikely to close it. Gaps, news and liquidity holes are separate risks, and the stop-loss you set still decides the loss you take before any margin call.
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