A margin call occurs when your equity-margin ratio (also known as margin level) falls below the level required to keep your trades open. Learn how margin calls work, when positions may be closed, and what you can do to manage your risk.
What is a margin call?
A margin call is a notification that your equity is approaching the minimum required to keep your positions open.
This happens when the market moves against your trades, reducing your available margin which might eventually lead to close-out.
How position close-out works
When your margin level falls too low, your positions may be closed automatically. This is known as a margin close-out.
There are two close-out processes. The one that applies depends on your account.
If you’ve received an email about updates to how positions are closed (subject: ‘Updates to your trading account’), close-out process 2 applies to you. If not, close-out process 1 applies.
The key difference is how positions are closed when your margin falls below required levels:
- Close-out process 1: positions are typically closed in full
- Close-out process 2: positions may be partially closed, with only the amount needed closed to restore margin
Our margin-call process
We aim to follow the process outlined below and will send margin call notifications where possible.
- If your equity drops below 100% of the required margin, you’ll receive a margin call.¹ You will no longer be able to open new trades or place orders.
- If your equity-to-margin ratio drops below 75%, you’ll receive a second margin call¹. You still will not be able to open new trades or place orders.
- If your equity falls to 50% or less of the required margin, the margin close-out process will begin automatically.
Margin call example
The scenario
- You have $3,500 in your account
- You open a position worth $10,000 (100 CFDs at $100)
- With a leverage of 1:5, you commit $2,000 as margin
- You have $1,500 remaining as available funds
How the margin call process would operate
The example below shows how margin levels change as the market moves.
If your margin level falls below 50%, positions will begin to close automatically. Positions may be closed in full or partially to restore margin.
If the price falls to $78:
- Position value = $7,800
- Equity = $3500 - $2200 = $1,300
The required margin adjusts to $1,560 ($7,800 with 1:5 leverage).
Your margin level is:
($1,300 ÷ $1,560) × 100 = 83%
At this point, you would receive your first margin call.
If the price falls further and your position value reaches $7,500:
- Equity = $1,000
This is 67% of the required margin, which is below the second margin-call threshold of 75%. You would receive another margin call.
If the value of your position falls below $7,200, your equity ($700) will drop to below 50% of the required margin ($1440). The margin close-out process will begin and, in this example, your position will be closed. If you had multiple positions, they will begin to close automatically.
The margin close-out process
When your equity falls to 50% of the required margin or below, the margin close-out process starts automatically. This is a regulatory requirement and cannot be deactivated.
The way positions are closed depends on your account.
Close-out process 1
Positions are closed progressively until your equity rises above 50% of the required margin:
- All pending orders are cancelled first
- All positions with losses are then closed
- Remaining positions are closed*
- Positions are closed in full
- Positions in closed markets are closed when markets reopen
Close-out process 2
Positions are reduced one by one to restore your margin level:
- Pending orders are cancelled first (earliest first)
- Positions are then reduced starting with the oldest
- Positions may be partially closed, rather than fully closed
- Only the amount closest to what is needed to restore the required margin is closed The system aims to bring your ratio back to at least 75%
- Positions in closed markets are skipped until markets reopen
*Please note that not all markets are open at the same time, so a profitable trade may be closed before a losing one.
How to reduce the possibility of receiving a margin call
There are some practical steps you can take to reduce the likelihood of receiving a margin call:
- Avoid over-leveraging and over-exposure
Ensure there is sufficient equity in your account to act as a buffer if the markets move against you - Diversify
Trade different asset types to spread out your risk - Track
Keep an eye on market prices, either manually or by using tools on our platform such as price alerts and watchlists - Manage risk
Apply stop-losses² and take-profits to your positions to stay in control of your exposure
How to avoid a margin close-out
Once you’ve received a margin call, you can take these actions to restore your margin level:
- Add funds to your account
- Cancel any pending orders
- Close some or all of your open trades
Understanding margin calls at 1:1 leverage
When you trade long with 1:1 leverage, margin calls are generally not expected. If the price rises, your equity increases; if the price falls, your equity decreases at the same pace. Since no capital is borrowed, the account typically cannot fall below the required margin level under normal market conditions.
However, not all assets are exempt from overnight fees when trading with 1:1 leverage. You can find more details here.
With 1:1 positions, a margin call can occur only in two specific situations:
- Short positions:
When you open a short position, your equity moves in the opposite direction of the market. Losses can accumulate more quickly, making a margin call possible even without leverage. - Currency exchange impact:
If your account is denominated in one currency (eg, EUR) while the instrument is priced in another (eg, USD), exchange-rate fluctuations can cause slight movements in your equity. In rare cases, this currency effect – rather than the trade itself – may trigger a margin call.
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¹ We may attempt to contact you by phone, email or SMS when your account is on margin call. However, it is your responsibility to ensure there are sufficient funds in your account at all times to meet your margin requirements. Markets can move quickly, and positions may be closed before we are able to contact you. If your equity drops from above 100% of the required margin to below 50% in a very short period, your positions may be closed without prior notice.
² Basic stop-loss orders are not guaranteed and may be affected by market conditions, including slippage. You can choose to place a guaranteed stop-loss to set a fixed limit on potential losses, which may incur a charge if triggered. For more details, please refer to our charges and fees page.