Margin Call

What Is a Margin Call?

A margin call happens when your account equity drops to a point where it can no longer support your open positions at the required Gearing level. Most retail forex brokers trigger a margin call when your margin level (equity divided by used margin, expressed as a percentage) falls to 100% or sometimes 50%. At that point, the broker warns you that you are running out of buffer.

For example, if you open a position requiring $2,000 in margin and your account equity drops to $2,000, your margin level hits 100%. The broker issues a margin call. If your equity continues falling, the broker may begin automatically closing your trades at the Stop-Out Level.

How to Avoid Margin Calls

The simplest way to avoid margin calls is to never use more than a fraction of your available margin. Many experienced traders keep their used margin below 10-20% of total equity, leaving a large cushion. Use the Margin Calculator before placing any trade to see exactly how much margin each position requires. Combine this with stop-loss orders so that losing trades are closed before they can drain your margin.

What Happens After a Margin Call

You have two options: deposit more funds to restore your margin level, or close some or all positions to free up margin. If you do nothing, the broker will close positions for you once the Stop-Out Level is reached, typically at 20-50% margin level depending on the broker. This forced liquidation often locks in large losses, which is why prevention through Money Management is always better than reaction.