A margin call is one of the most important (and sometimes stressful) moments in leveraged trading. It’s the point where the market has moved against you enough that your posted margin isn’t enough to cover the risk anymore. The broker steps in and says: “Add more funds, or we’ll have to close this trade.”
This system exists to protect both the trader and the broker. When you open a leveraged position, you’re using borrowed exposure. If the market drops faster than your account can handle, the broker needs reassurance that losses can be covered. The margin call acts like an early warning—letting you fix the situation before your account takes a bigger hit.
Margin calls can happen quietly or suddenly. During normal market conditions, they appear gradually as your equity drops. In volatile moments—like economic announcements, surprise news, or rapid price swings—they can hit almost instantly. Experienced traders often manage their margin proactively to avoid this kind of forced decision-making.
In prediction markets, the concept appears in simpler forms. Instead of traditional margin calls, platforms lock additional collateral or automatically reduce positions when probabilities shift too far. The idea is the same: ensuring traders can cover their potential losses.
Margin calls matter because they signal elevated risk. They warn traders that their position is no longer safely supported and that immediate action is required to avoid forced liquidation or account depletion.
A margin call is triggered when your account equity falls below the required maintenance margin. This usually happens because the market moved against your position and your posted collateral no longer covers the risk. The system checks your equity in real time, and once it dips under the threshold, the broker alerts you to add more funds. If you don’t respond, the broker may start closing your positions to prevent deeper losses.
Traders avoid margin calls by managing leverage carefully, using stop-loss orders, and keeping extra cash in their accounts as a buffer. Monitoring positions during volatile news events is especially important because rapid swings can drain margin faster than expected. Many traders also diversify exposure or scale into trades more slowly, so a single price move doesn’t put their entire account at risk. In short, margin calls are easier to avoid when margin is treated as a risk tool, not a comfort cushion.
If you ignore a margin call—or fail to add funds in time—the broker will usually start closing your positions automatically. This process, called liquidation, happens to protect the broker from covering your losses. Positions may be closed at unfavorable prices if the market is moving quickly, which can magnify the loss. That’s why traders are encouraged to act early, long before the account hits the forced-liquidation stage.
A trader opens a leveraged position in GBP/USD with $500 of margin. After a surprise Bank of England announcement, the pair drops sharply, and the trader’s account equity falls to $290—below the maintenance requirement. The broker sends a margin call asking for more funds. If the trader doesn’t act, the broker begins closing the position to prevent deeper losses.
