Equity thin against what's required:a margin call says top up, or be retired.
A notification from your broker that your account equity has fallen below the required margin level.
You must deposit additional funds or close positions to bring your margin back above the minimum threshold.
In plain words
A margin call is a warning that the funds in an account have fallen close to the minimum needed to keep its leveraged positions open. It is measured by the margin level: equity, meaning the balance plus or minus the result of open trades, divided by the margin in use and shown as a percentage.
See it move
Margin level has crossed Margin call level: Warning issued
Why it matters
After a margin call the choices are to add funds, to reduce positions, or to leave things as they are and risk the broker closing positions automatically at a lower level called the stop out. Each broker sets its own levels.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
An account has equity of 2,000 and 1,000 of margin in use; the broker in this example issues a margin call at a margin level of 100%.
- 1Margin level now2,000 ÷ 1,000 × 100 = 200%
- 2Open trades lose 1,000, so equity falls to 1,000
- 3Margin level1,000 ÷ 1,000 × 100 = 100%
The margin level has reached 100%, the level at which the broker in this example issues a margin call.
A common mistake
A margin call is often imagined as a telephone call that leaves time to respond. In electronic trading it is usually a status shown on the platform, and in a fast market the stop out can follow within moments.
Check yourself
Learn more
- Academy lessonLeverage and marginHow leverage ratios, required margin, margin calls and stop-outs work, with the arithmetic that shows why losses scale exactly as gains do.
- GuideTen common trading mistakes and how they happenNo plan, too much leverage, no stop, too many trades: the errors are well known and still routinely made. Each is described here with the habit that guards against it.
Educational information, not investment advice or a recommendation to trade.