Margin Call
Margin & Leverage
A margin call is a broker warning that account equity has fallen too close to the required margin, prompting the trader to add funds or reduce positions.
What is a margin call?
A margin call is a notification — historically a phone call, today almost always an on-platform alert or email — that a broker sends when a trading account’s margin level drops to a predefined warning threshold, commonly around 100% (this exact figure varies by broker). It is a signal that losses on open positions have eaten far enough into equity that the account is at real risk of an automatic stop-out if the situation doesn’t improve.
A margin call is not, by itself, the forced closure of positions — it’s a warning that gives the trader a chance to act before that happens.
A worked example
A trader has $1,000 of equity and $1,000 of used margin tied up in open positions, putting margin level at exactly 100% — ($1,000 ÷ $1,000) × 100%. If the broker’s margin call threshold is 100%, the platform now flags the account and may restrict opening further positions.
At this point the trader typically has three options:
- Deposit additional funds to raise equity and push margin level back up.
- Close some open positions to reduce used margin.
- Do nothing and risk the margin level falling further toward the broker’s stop-out level, where positions start closing automatically.
If the market keeps moving against the trader and equity falls to $500, margin level drops to 50% — likely triggering the stop-out itself, not just a warning.
Why margin calls matter
A margin call exists to protect both the trader and the broker from an account that has taken on more risk than its capital can support. It’s the last checkpoint before forced liquidation, which is why experienced traders treat a margin call as a hard signal to reduce risk immediately — reducing leverage, closing losing positions, or adding funds — rather than waiting to see if the market reverses.
Quick recap
- A margin call is a broker warning triggered when margin level falls to a set threshold, commonly around 100%.
- It is a chance to act — by adding funds or closing positions — before a stop-out forces closures automatically.
- Thresholds and exact behavior differ by broker; always check the account agreement.
- Receiving a margin call is a clear sign that current position sizing or leverage is too high for the account’s equity.