Direct answer
A margin call in forex is triggered when your account equity drops to the broker’s required margin level for your open positions. In practical terms, it signals that you may not have enough free funds to keep the trade running as prices move against your position.
If the situation does not improve, what happens next depends on the broker’s margin policy. Common outcomes include additional restrictions (such as limited ability to open new positions) and, later, automatic position reduction or closure when the account reaches a lower “stop-out” threshold.
How a margin call works
To understand “what happens,” it helps to use a few basic terms:
- Margin: The amount of account funds reserved to support your open positions.
- Equity: The value of the account including profit and loss from open positions.
- Free margin: Equity minus the margin currently tied up.
- Margin level: A ratio that compares equity to required margin (brokers calculate it slightly differently, but the idea is consistent).
A margin call typically occurs when the margin level falls to the broker’s specified margin call level. At that point, your account is considered at risk of not meeting the margin requirement.
If your positions continue to move against you, equity can fall further. Many providers use a separate, lower stop-out level. When that stop-out point is reached, the broker may automatically close some or all positions to bring the account back within required limits.
Example and practical checks (conceptual)
Consider an account with leverage: once a position opens, the broker locks margin to support it. If the market moves against the position, unrealized losses reduce equity. As equity drops, the margin level worsens.
When the margin level reaches the margin call level, the broker issues a margin call. If the margin level keeps falling, you then approach stop-out. At stop-out, the broker’s automated risk controls can close positions without waiting for your input.
Independent checks you can use to verify the concept on your own account are:
- Compare your equity and required margin values shown by the platform.
- Look for the platform’s displayed margin level and any vendor-defined thresholds (often labeled in the platform or agreement documents).
- Review the broker’s margin call vs. stop-out definitions, because they determine the sequence of events.
Relevant limitations and risks
- Broker rules differ: The exact margin call level, whether notifications are sent, and what automation occurs at stop-out are broker-specific.
- No single fixed outcome: A margin call does not automatically mean the broker will close your trades immediately; however, delayed action increases the chance of reaching stop-out.
- Prices can move quickly: Margin issues are driven by rapid changes in profit and loss on open positions, so outcomes depend on timing.
- No guarantee of restoration: Even if the margin level improves, the net result depends on the underlying price movement; a margin call is a risk signal, not a predicted recovery.
For precise expectations, rely on your broker’s published margin policy and the platform’s own calculations and thresholds for margin call and stop-out.