A Margin Call is a warning from your broker that your account’s Margin Level has fallen to a critical threshold, meaning you are close to losing all your available margin.
This alert happens when your floating losses consume most of your account balance, leaving little or no free margin to maintain your open positions.
1. Understanding Margin Call Level
✔ The Margin Call Level is a specific percentage (%) of Margin Level set by your broker.
✔ If your Margin Level falls to this threshold, your broker will issue a Margin Call.
✔ A Margin Call Level of 100% means that when your Equity = Used Margin, you will no longer be able to open new trades.
📌 Formula to Check Margin Call Level: 📢 Margin Level = (Equity / Used Margin) × 100%
If Margin Level ≤ Margin Call Level, you will receive a Margin Call notification!
2. What Happens When a Margin Call is Triggered?
🚨 Your broker will alert you via email, SMS, or trading platform notification.
🚨 You cannot open new trades until you restore margin.
🚨 You must take action to prevent forced liquidation.
A Margin Call does not automatically close your trades—it is just a warning. But if your losses keep increasing, you may hit the Stop Out Level, where trades get liquidated automatically.
3. Example: Margin Call at 100%
Let’s say your broker’s Margin Call Level is 100%, and you have the following account details:
📌 Account Balance: $1,000
📌 Open Position: EUR/USD (1 mini lot = 10,000 units)
📌 Margin Requirement: 2%
📌 Required Margin: $200
📌 Used Margin: $200
📌 Free Margin: $800
Step 1: Trade Moves Against You
🔴 Trade is down 800 pips ($1 per pip = $800 loss).
🔴 Floating Loss = -$800
🔴 New Equity Calculation:
📢 Equity = Balance + Floating P/L = $1,000 – $800 = $200
Step 2: Margin Level Calculation
📢 Margin Level = ($200 / $200) × 100% = 100%
💥 You just hit the Margin Call Level!
📢 You can’t open new trades until your Margin Level increases.
4. What to Do After a Margin Call?
If you receive a Margin Call, you have three options:
✔ Option 1: Deposit More Funds
🔹 Add more capital to increase Equity and restore Free Margin.
✔ Option 2: Close Losing Trades
🔹 Close some or all positions to free up Used Margin.
✔ Option 3: Wait for Market to Reverse
🔹 If your trade moves back in your favor, Floating Losses decrease, boosting your Margin Level.
⛔ Ignoring a Margin Call will lead to a STOP OUT, where your broker starts closing trades automatically!
5. What is a Stop Out Level?
📉 A Stop Out Level is lower than the Margin Call Level.
📉 If your Margin Level falls below the Stop Out Level (e.g., 50%), your broker will force-close your positions.
📉 Stop Out Level varies by broker but is typically 50% or lower.
Example:
✔ If your Used Margin = $200, your broker will start closing trades when Equity falls below $100, which is 50% Margin Level.
⛔ Stop Out = Forced Liquidation of Your Positions ⛔
🔥 Once a Stop Out is triggered, trades are closed starting with the largest losing position until Margin Level goes back above the Stop Out Level.
6. How to Avoid a Margin Call?
✔ Use Stop-Loss orders to manage risk and prevent large losses.
✔ Don’t over-leverage—use lower leverage to protect your margin.
✔ Monitor your Free Margin before opening multiple trades.
✔ Keep extra funds in your account as a cushion for price fluctuations.
✔ Avoid trading too large lot sizes—keep risk management a priority.
7. Summary:
✅ Margin Call = Warning that Margin Level has reached a critical threshold (e.g., 100%).
✅ Margin Call Level = A specific % (e.g., 100%) where your broker alerts you.
✅ Stop Out Level = A lower % (e.g., 50%) where your broker starts closing trades.
✅ How to Prevent Margin Calls? Lower leverage, use Stop-Loss, and manage risk properly!
🚀 Manage your margin wisely to avoid liquidation and trade safely! 💹
