What is margin call?

hi y all…im still a newbie and not yet graduate from pipsology school. my question is what is margin call at margin level of 20%. hard as i try to find those term in forexpedia but to no avail. the reason for asking is right now im just grooming for my entrance to b a trader like other peolpe here. before i commit i will ask a lot of questions.

lastly thank you for any help offered.

Hi Jantrivia,

Margin is the amount of money required in your account in order to open and maintain trades.

When the amount in your account goes below the min. margin requirement, your broker issues a margin call; meaning that your a/c is running out of funds needed to maintain your open trades (because your positions are going against you, and your a/c is in drawdown)

In this case, you would either have to:
-> increase your a/c balance (deposit more cash into your a/c), or
-> close out your open positions (will happen automatically if it breaches a set percentage below the min margin requirement), or
-> ride it out (wait and hope that your positions will turn around and go in your direction)

Hope that makes sense



this is a %age test

Thanks that really help sort it out.

Let’s Put This Way:

Margin Call = Nothing Good.

If you do risk and money management and apply position sizing correctly you don’t have to worry abut this concept.

Remember: No SL is related with Margin Call, also leverage is related to it too. So, never leave and oreder with no protection and never use too much leverage. Remember you have to use seatbelt before the accident, it is useless try to put it on after you’ve crashed.

In a perverse way, I think every trader should have one, just to experience it. I’ve had one, and I never want to see one again.

Indeed, that is your initiation, your right to be here, otherwise come back when you blow off your account.

absolutely. it’s like a souvenir and a badge of trading experience.
it’s no different from a scar you got when you fell off a bike or motorbike.

Margin call is when your account value depresses past certain point whereby you will be required to deposit additional money in order for your account to be brought up to a minimum margin required by your broker.

yeah I do agree with the sl. lots of my account blown off. thanks

For a start, let’s define what is margin in the context of your question. For example if you open a trade with 0.5 of standard lot (100 000 $) with leverage 1:400 then trading Margin (your own money) you’ll be required to have to open trade is (0.5*100 000)/400 = 125 bucks. Now about margin call. My broker (mercerfx) also has 20% of margin call (t’s the average percent when broker requires to fill up your account to continue trading), it means that you will get notification when there’ll left 125 bucks and 20% of it = 150 bucks.
Formula of Margin Call = Required Margin + 20% (or other percent)

A broker’s demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when your account value depresses to a value calculated by the broker’s particular formula.

This is sometimes called a “fed call” or “maintenance call.”

here you go! This helped me when I first started trading. There are few forex glossaries about - see what you think of this one: IronFX™ | The Global Leader In Online Trading

When you are using much money than you had in your account broker warns you that is a danger point . You have to loose almost all money at this point . They give you margin call you could not continue trading any more.

Yes forex business is about mony for capital and its will be help from the existance of leverage then leverage is close related with margin and when margin is low and can not handle the floating mines position then surely the boker will inform to inject with the fund more exactly to not loss all capital

Margin is the money required your trade open. And so when you run out of money as a result of your losses which will result to a margin call by your broker. And so to avoid margin call you have to learn how to protect your account.

Is it possible to inject with more fund to recover the margin call. In Liteforex broker allow this when their clients having problems with their trading strategy

Yes surely , it is function of margin call where any broker will inform to client if the margin in the account will near of stop out , so such client will get recommendation to inject more funds to not stop out immediatelly

This makes a lot of sense,digested this very well thanks

Margin call is the call made by the broker on an investor if the margin account of the investor diminishes in value. This call is made to maintain a certain amount of money in the trading account. This is an indication to add additional amount of money in the account to continue the trades in near future.