A margin call happens when your account equity drops below the required margin level, signaling that you don’t have enough funds to maintain open positions.

How It Happens

  1. You open a position with leverage
  2. Price moves against you
  3. Equity drops below margin requirement
  4. Broker issues margin call (warning)
  5. If equity continues falling → Stop Out (auto-close)

Typical Thresholds

LevelAction
100% Margin LevelMargin call warning
50% Margin LevelStop out begins
30% Margin LevelAll positions closed

How to Avoid Margin Calls

✅ Use proper position sizing (1-2% risk per trade) ✅ Set stop losses on every trade ✅ Don’t over-leverage ✅ Monitor your margin level regularly ✅ Keep extra funds in your account

Example

  • Account: $5,000
  • Open 1 lot with 1:100 leverage
  • Used margin: $1,085
  • 100-pip loss = $1,000
  • Equity: $4,000
  • Margin level: 369% (safe)

If loss reaches $4,500:

  • Equity: $500
  • Margin level: 46% → Stop Out triggered