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Margin Call Explained

A margin call is a demand from a broker for a trader to add funds or close positions when account equity falls below a required level. Margin calls only apply to leveraged accounts, where a trader borrows against deposited capital to control a larger position. This guide explains how margin calls arise, what typically happens when one is triggered, and how to check the specific rules that apply to any account you are considering. Because margin terms differ between brokers, account types and jurisdictions, always confirm the details in the broker's own current documents.

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What a margin call is and why it happens

When you trade on margin, the broker requires you to keep a minimum amount of equity in the account, often called maintenance margin. If losing positions reduce your equity below that level, the broker issues a margin call. The purpose is to protect the broker from lending against an account that can no longer cover its open exposure. A margin call is not a penalty in itself; it is a warning that the account has crossed a threshold defined in the account agreement. The exact threshold, how it is measured and how quickly you must respond are set by each broker and can change with market conditions.

Margin calls apply only to leveraged or borrowed-money positions, not to fully paid cash holdings.
The maintenance margin level is defined in the broker's account terms, not by a single universal standard.
Fast market moves can push an account from adequately funded to margin-called in a short period.

What typically happens after a margin call

Responses to a margin call generally take two forms: the trader adds funds or closes positions to restore equity, or the broker liquidates positions to bring the account back within its rules. Many brokers reserve the right to close positions automatically once equity falls to a stated liquidation level, sometimes without prior notice. The order in which positions are closed, whether partial closures are used, and how much time you are given all depend on the broker's documented procedures. Do not assume you will receive a phone call or a grace period; the account agreement is the controlling document.

Review the account agreement for the margin call level and the separate forced-liquidation level.
Check whether the broker commits to any notice period or may close positions immediately.
Understand which positions the broker may close first and whether partial liquidation is possible.

How to verify margin rules before you trade

Because margin terms are broker-specific, treat this topic as a verification checklist rather than a set of fixed numbers. Before funding a leveraged account, read the broker's current margin policy, account agreement and any product-specific margin schedules. Confirm how margin requirements can change, for example around volatile events, and where the broker publishes updates. If terms are unclear, ask the broker's support team in writing and keep the response. You can browse related concepts in the Glossary (/glossary), continue learning in the Education hub (/education), or turn these questions into a structured research process with Find my broker (/find-my-broker).

Locate the margin call and liquidation thresholds in the broker's current published documents.
Confirm whether margin requirements can be raised at short notice and how you would be informed.
Check how the broker handles margin calls outside normal market hours.
Keep written records of any clarifications you receive from broker support.

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FAQ

Does a margin call mean I have lost all my money?

Not necessarily. A margin call means account equity has fallen below a required level. Losses may grow if positions keep moving against you, and forced liquidation can lock in losses, but the call itself is a threshold event defined in the account agreement, not a total loss.

Can a broker close my positions without asking me first?

Many account agreements allow brokers to liquidate positions once equity falls to a stated level, sometimes without prior notice. Whether and when this happens depends on the specific broker's documented terms, so read the account agreement carefully before trading on margin.

Are margin call rules the same at every broker?

No. Margin call levels, liquidation levels, notice procedures and product-specific requirements vary between brokers, account types and jurisdictions. Always verify the current rules in the broker's own documents rather than relying on general descriptions.