A margin call happens when your account equity falls below your broker's minimum margin requirement. Your broker then either demands you deposit more funds or automatically closes your positions to bring your margin back above the required level. It's the forced consequence of having open losing positions that are too large relative to your account.
How It's Triggered: The Math
When you open a leveraged trade, your broker sets aside a portion of your capital as required margin (collateral). Your remaining capital — free margin — absorbs any floating losses on open positions.
Example: $5,000 account · Open a standard EUR/USD lot (requires $2,000 margin at 50:1) · Free margin = $3,000 · If the trade goes $3,000 against you, equity = $2,000 = exactly the required margin. This is the margin call threshold. Most brokers trigger a warning at 100% margin level and force-close positions at 50% (called a stop-out).
At 50% stop-out: the broker begins closing your largest losing positions automatically until your margin level recovers above the minimum. You don't get a warning — the liquidation happens instantly at market prices.
What Happens During a Margin Call
When the broker sends a margin call notification, you typically have a short window to either deposit additional funds or reduce your position size by closing some trades. If you don't act, or if losses accumulate faster than you can respond, the broker closes positions automatically.
Automatic liquidation often happens at the worst possible time — during fast-moving markets when spreads widen. You may receive execution at a price significantly worse than where you intended to exit. The stop-out is also partial: the broker closes positions until margin level recovers, not necessarily until all positions are closed.
The Real Cause: Position Size, Not Bad Luck
Margin calls feel like they're caused by market moves. They're caused by position size. A properly sized position — where your stop loss is set before entry and your lot size is calculated to risk 1–2% of your account — cannot trigger a margin call in normal market conditions. The stop would close the trade long before your equity approaches the margin threshold.
Traders who receive margin calls are almost always either: (a) trading without stop losses, so losses run unchecked, or (b) trading positions so large relative to their account that normal market moves consume the free margin.
How to Avoid a Margin Call
- Always use a hard stop loss. Every trade, every time. A stop loss ensures positions close at a predetermined loss rather than accumulating indefinitely.
- Calculate required margin before entering. Use the Margin Calculator to see exactly how much margin a position ties up. Compare this to your free margin.
- Keep total exposure below 10–20% of account in required margin. If you're using more than 20% of your account as margin across all open positions, you have limited buffer against unexpected moves.
- Size from risk, not from how much leverage you have. Available leverage is not a signal to use more of it. Your position size should be determined by where your stop is, not by how many lots you can technically open.