What it means
A margin call is a broker notification that your account equity is approaching the minimum required to support open positions. EU/UK retail FX: auto-liquidation at 50% margin level. US: at 100%. Once auto-liquidation triggers, the broker progressively closes positions (typically largest-loss first) until margin level returns above the threshold. The trader loses positions at whatever price the market offers at the moment of liquidation — usually unfavorable.
Why it matters
Margin calls are the structural endpoint for over-leveraged accounts. Once auto-liquidation triggers, the trader has lost control of when and at what price positions exit. The realised loss is typically 30-70% of account equity, depending on how concentrated the positions were. Avoiding margin calls is a binary skill: either size such that you never get close, or accept the catastrophic-loss tail risk.
How to use it
Run effective leverage continuously: total notional / account equity. Keep effective leverage at 5-10x for most retail strategies, well below broker maximums. When a position moves adverse and margin level approaches 200%, voluntarily close positions or add margin BEFORE the broker auto-liquidates. Never let the broker make the exit decision for you.
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