Margin call
a.k.a. Stop out
A warning, or forced action, from your broker when your losses leave too little money in your account to support your open trades.
A margin call happens when your account equity (balance plus or minus open profits and losses) drops too close to the margin your trades need. Your broker is saying: add money or cut positions.
Most brokers track a margin level: equity divided by used margin, shown as a percentage. Many issue a margin call at 100% and start a stop out lower down, often at 50%, where they close your trades for you, biggest losers first, at whatever price the market gives.
The cure is not a bigger deposit. It is smaller positions, less leverage, and a stop-loss that gets you out long before the broker has to.
How close is the cliff?
- Balance: $2,000. Open 1 standard lot EUR/USD at 100:1, so used margin = $1,085 and each pip = $10.
- Price falls 50 pips: equity = $2,000 − $500 = $1,500. Margin level = 1,500 ÷ 1,085 ≈ 138%.
- Price falls about 92 pips: equity ≈ $1,080, margin level just under 100%. Margin call.
- If the stop out is at 50%, it comes when equity is about $542, roughly 146 pips down.
Bottom line: A move of less than one percent was enough to trigger a margin call on this account.
Topping up the account to "ride out" a margin call. That often just feeds more money into a losing trade.
Keep this word for good
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