Margin call: meaning in forex and gold trading
A margin call is a warning that your equity has fallen close to the margin required to keep positions open.
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Margin call: A margin call is a warning that your equity has fallen close to the margin required to keep positions open.
When a margin call happens
Brokers set a margin call level as a margin level percentage, for example 100%. If losses push equity down so that equity ÷ used margin falls to that level, you are warned that positions may be closed. In the past brokers phoned clients; today it is usually an alert on the platform.
What follows
If the margin level keeps falling to the stop out level, the broker starts closing positions, usually the largest loser first. For UK and EU retail CFD accounts, regulators require brokers to close out positions when margin falls to 50% of the required amount. You can avoid this by sizing positions so that losses at your stops never come close to these levels.
Worked example
Equity $3,000, used margin $2,500, margin level 120%. A further $500 loss takes equity to $2,500 and the margin level to 100%, which triggers a margin call at many brokers.
Common mistakes
- Adding funds to save a losing trade instead of reviewing the position size.
- Trading without stop losses so losses can run into a margin call.
If you follow trade signals, for example the gold signals or EUR/USD signals, understanding this term helps you size and manage each trade yourself. The free Forexuro Telegram channel shares daily market updates where these ideas are used in practice.
Related terms
Tools and guides
Frequently asked questions
Can I lose more than my deposit?
Retail CFD clients of UK and EU regulated brokers have negative balance protection. Elsewhere it depends on the broker.
How do I avoid margin calls?
Risk a small percentage per trade, always use a stop loss and avoid stacking correlated positions.
Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.