margin call - definition

A margin call is a broker-issued demand for a trader to deposit additional funds or close positions when their margin level falls below the broker's required threshold. It acts as a risk-control mechanism that prevents the account from entering negative equity. This event applies to leveraged trading only and does not occur in fully funded cash accounts.

Margin Level = (Equity / Used Margin) × 100%
Margin call triggered when Margin Level < broker threshold (e.g., 100%)

A trader opens a 0.5 lot AUD/USD position with $2,000 used margin and $3,000 equity. The broker's margin call threshold is 100%. If the trade moves against the trader and equity drops to $1,800, the margin level becomes ($1,800 / $2,000) × 100% = 90%. Since 90% is below 100%, the broker issues a margin call requiring the trader to deposit funds or reduce the position. The trader must act before the stop-out level is reached.

• JPY pairs: Margin calculations for JPY-denominated pairs use different pip values and may trigger margin calls at slightly different equity levels due to rounding.
• ASIC regulations: Australian brokers under ASIC must use negative balance protection on retail accounts, meaning a margin call cannot result in a debt exceeding the deposited amount.
• Overnight positions: Some brokers apply higher margin requirements for positions held through market close, which can trigger a margin call even if intraday margin levels were safe.

• stop-out
• leverage
• drawdown
• margin level