🧱 Basics·beginner

Margin Call

The broker's warning (or automatic closeout) when your account loses too much and can no longer support your open trades.

A margin call is what happens when your losses eat your free margin and the broker says "you need to add money or we're closing your positions." Most modern forex brokers skip the warning and auto-liquidate — this is called a "stop out" and usually kicks in around 20-50% margin level. Margin calls happen when traders are over-leveraged and don't have stop losses. One bad news spike, one missed FOMC, one weekend gap — and the account is toast. It's the single most common way new traders die. Prevention is simple: small size, hard stop losses on every trade, and never put more than 1-2% of your account at risk on any single position. If you do that, margin calls become literally impossible.

Real trade example

The 2015 CHF unpeg sent thousands of retail accounts into negative balance. Brokers like Alpari UK went bankrupt overnight because so many traders had margin called at once.

Related terms

Margin

beginner

The amount of your own money locked up as collateral to open and hold a leveraged position.

Leverage

beginner

Borrowed money from your broker that lets you control a large position with a small deposit.

Stop Out

intermediate

The automatic closing of your positions by the broker when your margin level drops too low — happens without warning.

Drawdown

intermediate

The peak-to-trough drop in your account equity — a measure of how bad your worst losing streak got.

Equity

beginner

Balance plus or minus your current floating P&L — what you'd have if you closed every trade right now.

Currency Pair

beginner

Two currencies quoted together — you're always buying one and selling the other at the same time.

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