Costs & Leverage
Margin call
A broker warning that your equity has fallen too close to the margin your open positions require — typically when the margin level (equity ÷ used margin) drops near 100%. Add funds or reduce size, or a stop out follows.
Also called: margin level
In practice
You use $5,000 of margin and your equity falls to $5,200 — a margin level of 104%. The broker warns you are too close. You either close the worst position to free margin or deposit funds; if equity keeps falling toward 100%, automatic closure is next.
Why it matters for traders
A margin call is the last clear warning before the broker takes control of your account away from you. Traders who never want to receive one size positions so that an ordinary adverse move never threatens their margin level — they treat free margin as a buffer, not as money to spend on more lots.
Common pitfall
The mistake is treating a margin call as a normal event to trade through, or funding the account to keep the position open instead of closing the loser. Each added deposit raises your real risk to recover a larger loss. The correct response is to cut the worst position and re-plan size — never to double down. If you ever see a margin call, your position sizing was wrong; fix the sizing, don't feed the margin.
Lessons that use this term
- Margin call & stop out
The two levels where the broker steps in — and why correct position sizing means you never meet either.
Related terms
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