When trading with leverage, your account equity needs to stay above a certain level to keep positions open. If the market moves against you and your funds fall too low, you may receive a margin call.
Understanding margin, margin calls, and stop-outs is essential for managing risk.
What is margin in forex?
Margin is not a fee or a cost. It is a portion of your account balance set aside by the broker as a security deposit to keep a leveraged position open.
- Required margin: The amount needed to open and maintain a specific trade.
- Free margin: The funds not currently being used as required margin. Free margin can absorb market movement or support new trades.
- Equity: Your balance plus or minus floating profit or loss.
- Margin level: Equity divided by used margin, expressed as a percentage.
What triggers a margin call?
A margin call happens when your account equity falls below a specific percentage of your required margin. This percentage is called the margin call level.
When your margin level reaches the margin call threshold, your platform alerts you that the account is under pressure. If the market continues moving against you and your margin level falls further, the account can reach stop out. At stop out, the system starts closing open positions automatically to reduce risk.
Margin call metrics at TabTrade
TabTrade margin call and stop-out thresholds vary by account type.
| Account type | Margin call level | Stop-out level | Key takeaway |
|---|---|---|---|
| Standard Account | 100% | 50% | You receive a warning when equity matches required margin. Positions can start closing if equity falls to half of required margin. |
| Edge Account | 100% | 50% | Uses the same risk limits as Standard, giving a clear buffer before automatic close-out. |
| Raw Account | 120% | 80% | Uses a tighter buffer, with earlier warning and earlier stop out for high-volume trading. |
Example of a margin call
Imagine you have a Standard Account with a balance of $2,000. You open a position that requires $1,000 in margin. This leaves $1,000 in free margin.
- The trade moves against you and the floating loss reaches $1,000.
- Your equity is now $1,000.
- Because your equity equals your required margin, your margin level reaches 100% and the platform issues a margin call.
- If the loss grows to $1,500, your equity falls to $500.
- Since $500 is 50% of the $1,000 required margin, the account reaches the 50% stop-out level and the system can start closing trades.
How to reduce margin call risk
- Use stop-loss orders on every trade.
- Keep position sizes small relative to account equity.
- Avoid opening too many large positions at the same time.
- Monitor margin level in MetaTrader 5 or cTrader.
- Add funds or reduce exposure before margin level becomes critical.