What is the difference between available margin and used margin

Used margin is the portion of your account equity that is currently locked up as collateral to keep your open positions active. Available margin (often called free margin) is the remaining equity you have available to open new trades. When your open positions move into a loss, your equity drops, which reduces your available margin.

In prop firm trading, understanding these metrics is critical for managing your risk and protecting your daily loss limits. If you let your used margin get too high without leaving enough buffer, a sudden market swing can trigger a margin call or breach your drawdown rules before you can react. Always size your positions carefully relative to your account size.

How do you usually calculate your buffer? Drop your thoughts below!