What is a margin call in forex?

[PIPruit]

What is a margin call, how do you avoid it, and what is going to happen when you get one, please?

 

[Eryk Martin]

A margin call is a notification that you will receive within your trading platform if your available funds(free margin) falls below the limit set by your broker. This happens when your positions are running into losses and you need more funds to keep the position running.

 

[tradermini]

Different brokers have varying limits for the margin level. Most of them sets limit at 100%. So this limit is called a margin call level. 100% margin call level means that when your account margin level reaches 100%, you can still close your positions, but you cannot take any new positions. So you can find margin level by this formula Margin level = (equity/your used margin) x 100
So margin call happens when your broker informs you that your margin deposits have simply fallen below the required minimum level, owing to the fact that the open position has moved against you.
I think that margin calls can be avoided when you carefully monitoring account balance on a regular basis and by using stop-loss orders to minimize the risk.

Thanks for your detailed answers

 

[davtrent55]

Simply put, it's a very bad day at the office

 

[bigdolly]

What is a margin call, how do you avoid it, and what is going to happen when you get one, please?

Trading with leverage (borrowed money) is based on margin (insurance deposit). When loss on a trading position exceeds 50% of margin you get margin call. It's a simple concept yet newbies don't pay enough attention to it because they are confident in precision of their market guesses.

 

[Forex Harvey]

Thank you for this, it is most helpful.

 

[Anakelv]

Margin call is a kind of notification in forex which lets you know that you have to deposit more money in your trading account or close losing positions in order to free up more margin. It's denoted as a fixed percentage which is determined by your broker and can be seen in account specifications on your trading account. Basically, when the market moves against your current open positions the margin level starts to fall. So, once the margin falls to the margin call percentage you should expect to get this notification (warning). These notifications warn you that the stop out level is approaching.

 

[Fenrilrajas]

The name Margin Call appeared back in the days when transactions were made over the phone. So, when the Margin Call came, the broker would warn the trader by telephone that it was necessary to replenish the deposit. Now the quotes in the market are changing so fast that the broker simply does not have time to call.
Margin call is just a warning that the trader might have problems. The notification goes through the trading terminal or comes to the e-mail. At this stage the broker simply warns the investor - no compulsory actions will be performed.

 

[perryjohn765]

margin call is an alert when the margin drops below a particular point. the margin call may be different depending on broker to broker. with majority of brokers it is 70%. for example if you have $1000 in your account and you start losing and the equity reached in that case you will receive a margin call. which you can either close the position or add some more funds to the account cz if either of the steps are not followed in that case the stop out will hit at arounnd 50% which means when you have $500 as euquity and in that case positions will be automatically closed.

 

[Kirstysingy]

When you’ve dropped below the margin amount your broker cuts off your trades. This is usually before you lose every penny as the markets move quickly it gives a small buffer

 

[tomhiggs]

Margin call is a reminder by broker that your trades are not going in expected direction and the amount in the account can wipe out. Every broker has different margin levels from 90% to 70% depends upon the amount of risk associated on the account.