What is a margin call?
In one line: A margin call is a demand from your broker to add money or close positions because your account has fallen below the minimum it must hold when you borrow.
A simple example (US stocks)
You buy $10,000 of stock. You put in $5,000 and borrow $5,000 from your broker. That's the usual 50% start under the Fed's Regulation T.
Your equity is what's yours: the stock's value minus the loan.
FINRA's rule says equity must stay at least 25% of the stock's value. Many brokers ask for 30% or more.
At 25%, the call comes when:
- Stock value − $5,000 loan < 25% of stock value
- That happens below about $6,667
So a 33% drop in the stock triggers the call. Your $5,000 has shrunk to about $1,667, a loss of about two-thirds.
What happens next
You can add cash, add shares, or sell to cut the loan. If you don't act in time, the broker can sell for you. They may not wait, and they pick what gets sold.
Forex, futures and crypto
The same idea, faster. Forex brokers often close positions automatically at a "stop-out" level. Futures need enough margin each day. Crypto exchanges use liquidation, which can happen in minutes with high Leverage.
Why it matters
A margin call means the loss is already real. With borrowed money, a normal-looking drop can wipe out a big slice of your own cash.
A common mistake
Using a stop loss as an afterthought on a margin trade. A Stop loss set from the chart, with size from the math, closes the trade long before a margin call. Your risk should be about the stop, never about how much you can borrow.
Run your numbers in the margin calculator before using borrowed money. Our leverage and margin guide explains the rest.
Questions
How long do you have to meet a margin call?
It depends on the broker. Some give a few days, others act much sooner. In fast markets they can sell without waiting.
Can I lose more than I put in on margin?
Yes. If prices gap far enough, losses can exceed your deposit, and you'd owe the broker the difference.
How do I avoid a margin call?
Borrow less, keep spare cash in the account, and always trade with a stop sized from your risk, not from your buying power.
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