A margin call happens when your account equity falls below the required margin level. If not addressed, the broker will automatically close your trades at the stop-out level.
Two of the most important risk concepts for any forex trader to understand are margin call and stop out. Knowing what they are — and how to avoid them — can save your trading account.
Margin is the amount of money your broker holds as a deposit to keep your open trades active. It is not a fee — it is a security deposit that is returned when you close the trade.
When you open a trade, a portion of your account balance is locked as margin. The rest is your free margin, which you can use to open additional trades.
A margin call occurs when your account equity drops to a level where your broker warns you that you do not have enough free margin to keep your trades open.
Most brokers set the margin call level at 100% — meaning when your equity equals your used margin, you will receive a warning.
At this point, you should either:
If you ignore the margin call and your equity continues to fall, the broker will automatically close your trades — starting with the most unprofitable one — until your margin level recovers.
This is called a stop out. Most brokers set the stop out level between 20% and 50% margin level.
Understanding margin is not optional — it is one of the fundamental skills every trader must develop before trading live.
Educational Content Disclaimer: This article is intended for general educational purposes only and does not constitute financial advice or a recommendation to trade. Forex and CFD trading involves significant risk. You may lose some or all of your capital. Always seek independent financial advice if you are unsure whether trading is appropriate for your circumstances.
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