What is a margin call
A margin call is a warning from the trading platform that your account no longer has enough funds to comfortably support your open positions. It is not a fee or a trade. It is a signal that the broker may soon start closing your positions.
To follow how it happens, you need these terms:
- Margin (used margin): the amount the broker sets aside from your balance to keep a leveraged position open.
- Equity: your balance plus or minus the floating profit or loss of open trades.
- Free margin: equity minus used margin. This is what is left to absorb losses or open new trades.
- Margin level: equity divided by used margin, shown as a percentage. MetaTrader displays it in the terminal window when positions are open.
When losses reduce equity, the margin level falls. Once it drops to the broker's margin call level, you get the warning.
Margin call and stop out: the difference
The margin call is the warning threshold. The stop out is the threshold where the broker's system starts closing your positions automatically, usually beginning with the position that has the largest loss. It keeps closing positions until the margin level is back above the stop-out level or nothing is left open.
Stop outs happen at market prices. In fast markets or after a gap, the fill can be worse than the price you expected, so the realised loss can be larger than your calculation.
Margin call and stop-out levels differ between brokers and account types. If you trade with Exness, check the current levels for your account type in the personal area or on the official site.
The chain from oversizing to stop out
Most stop outs follow the same sequence:
- Oversizing. The position is large relative to equity. High available leverage makes this easy, because the platform lets you open far more than your risk plan would allow.
- Thin free margin. Used margin takes up most of the equity, so only a small adverse move is needed to reach the warning level.
- Normal price movement. The market does not need to move unusually far. Ordinary volatility, a spread widening at rollover or a news release can be enough.
- Margin call. The margin level crosses the warning threshold. Many traders freeze, hope for a reversal or add to the position.
- Stop out. The system closes positions at whatever price is available.
Leverage itself is not the cause. The cause is position size compared with the equity behind it. Effective leverage measures exactly that: the total exposure of your open trades divided by equity.
Check your own numbers
Use the calculator below to enter your equity, position size and entry price. It shows your margin level and the prices at which the margin call and stop out would happen.
Fill in the empty fields to see the result.
Margin level = equity / used margin × 100%. Equity falls with the floating loss; the price for a level L solves balance + P/L = L × margin. Margin is taken at the entry price. In a gap the position can close at a worse price.
Compare those prices with where your stop loss sits. If the stop-out price is closer than your stop loss, the position is too large for the account. The broker would close it before your own exit is reached.
Keep a buffer
A buffer is the distance between your planned exit and the price where the stop out would occur. Practical ways to build one:
- Size from the stop loss, not from leverage. Decide where the trade is wrong, decide how much of equity you accept losing there, and calculate the lot size from those inputs. See position sizing and risk per trade.
- Always use a stop loss. A stop loss closes the trade at a level you choose, long before the margin level gets near the warning threshold. See stop loss placement and the risks described in trading without stop loss.
- Account for volatility. Wider-moving instruments such as gold or indices need smaller positions for the same risk. ATR position sizing adjusts size to recent volatility.
- Leave free margin unused. Do not treat free margin as money waiting to be traded. Unused free margin is what keeps you away from the warning level.
Set alerts before it gets close
Alerts give you time to act while you still have choices:
- Price alerts in MetaTrader at a level between your entry and the margin call price. When the alert fires, review the trade calmly instead of reacting at the warning level.
- Your own margin-level rule. Choose a margin level well above the broker's margin call level at which you stop adding positions and start reducing.
- Event awareness. Note high-impact news and weekends in advance. Spreads can widen and prices can gap. See trading news risks and gap and weekend risk.
Reduce exposure
If the margin level is falling, the effective options are the ones that reduce exposure:
- Close or partially close losing positions. This releases used margin and stops further loss on that part. Scaling in and out covers partial exits.
- Do not add to a losing position to "average down". It increases used margin and brings the stop-out price closer.
- Watch correlated trades. Several positions on pairs that move together act like one large position. See correlation risk.
- Avoid the reflex deposit. Adding money raises equity, but if the position is still oversized it can postpone the stop out and make it larger. Decide your rule for this in your personal risk plan, not during the trade.
- Use a daily loss limit. Stopping for the day after a set loss prevents the attempts to win it back that often end in a stop out. See daily loss limits.
Ready to try it on a real or demo account?
Partner link · trading carries a high risk of loss
Simulate before you trade
Before opening a position, run it through the margin call calculator above with a few scenarios:
- your planned size at entry,
- the same size after an adverse move to your stop loss,
- a larger size, to see how quickly the stop-out price moves closer.
Rehearsing on a demo account shows how margin level changes in real time without risking money. No calculator, buffer or rule guarantees a profit or prevents every loss. These tools only show where the account becomes fragile. Leveraged CFD and forex trading can lose money fast, including the whole deposit.
Local context for Pakistani traders
Know the regulatory position before you trade: per the SECP, offshore platforms have no Pakistani licence or oversight and offer no legal protection or recourse. Also, per the SBP, the purchase of offshore forex/margin/CFD products by Pakistani residents violates section 4(1) of FERA 1947. Read more in law and regulators and regulation and safety.
Frequent questions
What is a margin call in simple words?
It is a warning that your equity is getting too small to support your open positions. If losses continue, the stop out follows and positions are closed automatically.
Is a margin call the same as a stop out?
No. The margin call is the warning level. The stop out is the lower level where the broker's system starts closing your positions.
How to avoid a margin call?
Size positions from your stop loss and your risk per trade, keep free margin unused as a buffer, set alerts, and reduce exposure early instead of adding to losing trades.
Does lower leverage prevent margin calls?
The account leverage setting only changes how much margin a position needs. What matters is the size of your positions compared with equity. A small position on high leverage is safer than a large one on low leverage.
Can I lose more than the stop-out level suggests?
Yes. Stop outs fill at available market prices, and gaps or fast moves can make the loss larger than calculated.
Where can I check the margin call and stop-out levels?
They depend on the broker and account type. Check the current conditions in your broker's personal area or on its official site, then enter them in the calculator on this page.