Margin call meaning in plain words
A margin call is a warning from your broker that your account has too little money left to support your open positions.
When you trade forex or CFDs with leverage, the broker sets aside part of your money as margin. Margin is a deposit that keeps the position open. It is not a fee. If your open trades lose money, the money left in the account shrinks. When it falls too far compared with the margin in use, the platform raises a margin call.
The margin call itself usually closes nothing. It tells you that the account is close to the point where the broker will start closing positions for you. That later point is called stop out.
Leveraged trading can lose money fast. A small price move against a large position can take you from a normal account to a margin call within minutes.
Simulate the price move to a margin call
Enter your balance, the instrument, your position size, your leverage and the margin call and stop-out levels of your account. The calculator shows your current margin level and the prices at which 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.
Every figure on this page comes from this calculator with the inputs you enter. Check that the margin call and stop-out levels you enter match your own account. These levels differ between brokers and account types, so check the current conditions in your broker's personal area or on its official site.
The terms behind a margin call
To understand what triggers a margin call, you need these account values. In MetaTrader they appear in the Trade tab.
| Term | What it means |
|---|---|
| Balance | Money in the account, not counting open trades |
| Equity | Balance plus or minus the floating profit or loss of open trades |
| Used margin | Money set aside to keep current positions open |
| Free margin | Equity minus used margin, the room left for losses and new trades |
| Margin level | Equity divided by used margin, shown as a percentage |
For more on each term, see what is margin, free margin, margin level and equity vs balance.
What triggers a margin call
The margin call level is a margin level percentage that your broker sets. When your margin level drops to that value or below it, the margin call is triggered.
Margin level falls when:
- open trades move against you, so equity drops;
- you open more positions, so used margin rises;
- spreads widen, so floating losses grow even if the mid price barely moves;
- swaps and commissions are charged, which reduce equity;
- the price gaps over a weekend or after news.
Margin level is calculated for the whole account, not for each trade. A losing trade can push the account into a margin call even while other trades are in profit.
Margin call vs stop out
| Margin call | Stop out | |
|---|---|---|
| What it is | A warning | Forced closing of positions |
| Who acts | You decide what to do | The broker's system closes trades |
| When | Margin level reaches the margin call level | Margin level reaches the lower stop-out level |
| Result | Nothing closes by itself | Positions close, usually the biggest loser first, until margin level recovers |
On some accounts the margin call and stop-out levels are close together, so there is very little time between the warning and the forced close. The calculator shows both prices side by side, so you can see how far apart they are for your position. See stop out for how forced closing works.
What a margin call obliges you to do
In stock or futures margin accounts at exchange brokers, a margin call can be a formal demand to deposit more money by a deadline.
In retail forex and CFD trading, a margin call is usually only a notice. You are not required to deposit money. If you do nothing and the price keeps moving against you, the stop out closes positions automatically. The loss is then realised and stays in your account history.
Read your broker's client agreement for the exact rules, including how it treats a balance that goes below zero after a gap.
How to respond to a margin call
You have three basic options. Each changes a different part of the margin level formula.
Reduce position size
Close part of a position or close smaller trades. This lowers used margin. The loss on the part you close becomes realised, but the rest of the account has more room. See closing trades.
Add funds
A deposit raises equity and lifts the margin level. It also raises the amount of money exposed to the same losing position. If the position keeps moving against you, the new money can be lost too.
For readers in Pakistan, there is also a legal point. On payments: per the SBP, remitting foreign exchange to overseas forex/margin/CFD platforms is not allowed through any payment channel (FERA s.5(1)). Also, per the SECP, offshore platforms have no Pakistani licence or oversight and offer no legal protection or recourse. See law and regulators before sending money anywhere.
Close the position
Closing the losing trade ends the risk from it and fixes the loss. Many traders who keep losses small do this based on a rule set before entering, such as a stop loss, rather than deciding under pressure.
Preventing the next margin call
- Size positions so that your stop loss is hit well before the margin call price. Run your planned trade through the calculator above before opening it.
- Use lower effective leverage. See what is leverage.
- Keep free margin in mind before news releases and weekends. See price gaps.
- Do not add positions to a losing trade only to "average" it. This increases used margin.
More on this in risk management.
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Precise definitions for experienced traders
- Margin level = equity ÷ used margin, as a percentage. Equity includes floating P/L at the current close price of each position (bid for longs, ask for shorts), plus accrued swaps and commissions where the platform counts them.
- Margin call level and stop-out level are thresholds on margin level, set by the broker per account type. Some brokers express them in a different way, so read the specification.
- Hedged positions: many platforms calculate margin for opposite positions in the same symbol at a reduced rate or net it off. This changes used margin and the margin call price.
- Floating margin: on instruments where margin depends on the current price, used margin changes as the price moves. The margin call price then moves too, and a simple straight-line estimate becomes less accurate.
- Leverage changes: some brokers apply different margin requirements around news, weekends or for large volumes. That can raise used margin and trigger a margin call without any price move.
- Execution at stop out: positions close at the next available price. In a fast market or a gap, the fill can be worse than the stop-out price shown in the calculator. See slippage.
- Currency conversion: if the account currency differs from the quote currency, the exchange rate between them also affects equity and margin.
Frequent questions
What is a margin call in forex?
It is a warning that your margin level has fallen to the margin call level set by your broker. It tells you that the account is close to stop out.
Does a margin call close my trades?
Usually not. The stop out closes trades. The margin call is the notice that comes before it.
What is a typical margin call level?
It depends on the broker and the account type. Check the current value in your broker's personal area or on its official site, then enter it in the calculator above.
Can I lose more than my deposit?
In a fast market or a price gap, a stop out can close at a worse price than expected. Whether a negative balance is reset depends on the broker's terms, so read them.
Is adding money the right response?
That is your decision. It raises margin level but also the amount at risk. Reducing size or closing are the other options.
How can I practise this without real money?
Open positions on a demo account and watch how margin level changes as the price moves. See also demo vs live trading.