- With equity of 8,750 USD, and
- used margin of 2,500 USD,
- free margin would be 8,750 - 2,500 = 6,250 USD.
If you try to open a spot position on margin, for which you do not have sufficient free margin, the order will be automatically cancelled with the message, "Insufficient free margin. Try adding more collateral currency, increase your leverage level or reduce your position size".
This error will also show when open orders are locking up collateral. In this case closing open orders may allow you to open the position.