A margin call is a warning that your margin level has fallen to 50%. No positions are automatically closed at the margin call level. It indicates that your available margin is becoming limited and that you may need to add funds or reduce your positions before the stop-out level of 20% is reached.
How Is a Margin Call Triggered?
Margin level = (Equity ÷ Used margin) × 100%
When your margin level reaches 50%, a margin call condition is triggered. Positions are not closed at this level.
If your margin level continues to fall and reaches the 20% stop-out level, positions may be automatically closed to reduce the margin used.
How Are You Notified?
A margin call may be indicated through platform notifications or changes to the margin information displayed in the trading platform.
Do not rely solely on receiving a notification. In fast-moving markets, your margin level may fall through the margin call and stop-out levels quickly. The margin level shown in your trading platform is the key figure to monitor.
What Happens If You Do Nothing?
Your positions remain open while the margin level is above the applicable stop-out level.
If the market moves in your favour, your equity and margin level may recover and the margin call condition may clear without any positions being closed.
If the market continues to move against you and your margin level reaches the stop-out level, positions may be closed automatically.
What Can You Do?
You can take steps to increase your margin level or reduce your exposure:
- Close a losing position. Releases its margin and stops the loss growing. Closing the largest loser has the biggest effect.
- Partially close a position. Releases part of the margin while keeping some exposure.
- Deposit additional funds. Increases equity directly. Allow time for the deposit to credit.
- Close a hedged pair. Realises the frozen result and releases the margin.
What About Increasing Leverage?
Increasing leverage may reduce the margin required for existing positions, depending on the applicable account and product conditions. This can increase free margin and affect your margin level.
However, it does not reduce your position size or exposure. The same price movement can still result in the same profit or loss.
Increasing leverage should therefore not be viewed as a way to reduce trading risk.
How to Avoid Margin Calls
- Set a Stop Loss based on your risk tolerance.
- Keep sufficient free margin instead of using most of your available funds.
- Size positions based on your account and risk tolerance, rather than the maximum allowed by your leverage.
- Monitor your margin level before weekends and periods of potentially high volatility.
- Closely supervise automated strategies (EAs) or copy trading signals that open multiple concurrent positions.
