Margin Call
Category
Krypto-spezifisch
Sub-category
Liquidationen & Open Interest
Curated by
Last reviewed
A margin call is the broker's demand to deposit additional capital or reduce positions because the deposited margin has fallen below the minimum requirement (maintenance margin). It is the last warning stage before forced closure (liquidation). Anyone receiving margin calls regularly has already violated their risk management beforehand – professional traders size positions so it never gets that far.
Context & Mechanics
Definition and process
Anyone trading on margin deposits only part of the position value as collateral. If the account falls below the maintenance margin through unrealised losses, the broker triggers the margin call: the demand to deposit capital or reduce positions within a deadline. Historically the “call” came by phone – today these are automatic notifications, and many providers close positions automatically at defined thresholds (margin close-out) without waiting for a reaction.
Margin call vs. liquidation
The margin call is the warning stage, liquidation the execution: with classic brokers a time window to act lies between the two, in crypto derivatives trading the call usually does not exist at all – positions are closed directly at the liquidation price. EU-regulated retail CFD accounts have a 50% close-out rule: if margin falls below 50% of the initial requirement, the broker must close positions. Negative balance protection additionally prevents retail clients there from losing more than their deposit.
The professional approach
A margin call is almost always a symptom, not the disease: oversized positions, missing stops or sitting out losses brought the account there beforehand. Adding funds to a falling position (“doubling down”) usually worsens the problem. The robust answer is preventive: derive position sizes from account risk and stop distance so the buffer to the maintenance margin stays structurally large – the stop-loss then acts long before the broker has to intervene.
Why it matters for traders
Not knowing your account's margin mechanics means leaving the most important exit to the broker. In the GlanWick simulator, margin scenarios of leveraged positions can be played through by way of example without real capital – GlanWick is a training and simulation tool and not a prop firm itself.
Execution Example
A trader holds a leveraged long position of $50,000 at 5x leverage: $10,000 initial margin. The broker's maintenance margin is $5,000. The price falls 8%.
- Unrealised loss: 8% of $50,000 = $4,000 → remaining margin $6,000, still $1,000 above the maintenance threshold.
- Margin call: if price falls another 2% (−$1,000), margin reaches $5,000 – the broker demands a top-up or position reduction.
- Options: adding funds increases risk in a running losing trade; a partial sale reduces position value and margin requirement; a full exit realises −$5,000 = 50% of the deposit.
- Preventive calculation: with a stop-loss at −2% (loss $1,000 = 10% of margin) the position would have been closed long before any margin threshold – the margin call would never have occurred.
Execution Risk & Errors
Adding funds to falling positions instead of closing the trade as planned
Not knowing your broker's maintenance requirement and close-out rules
Sizing positions at maximum available margin instead of account risk
Accepting margin calls as a normal part of trading instead of an alarm signal for risk management
Holding several correlated positions whose simultaneous drawdown blows up the margin
Frequently Asked
What happens if I ignore a margin call?
The broker force-closes positions (close-out or liquidation) until the margin requirement is met again – usually regardless of price level or timing. For EU retail CFDs the 50% close-out rule applies automatically.
Is a margin call the same as a liquidation?
No: the margin call is the warning with a deadline to act, liquidation the automatic forced closure. In crypto derivatives trading the warning stage usually does not exist – positions are closed directly at the liquidation price.
Can a margin call leave me in debt to the broker?
On EU-regulated retail CFD accounts negative balance protection prevents this. On professional accounts, futures or securities loans, obligations beyond the deposit are possible.
How do I structurally avoid margin calls?
Derive position size from account risk and stop distance, use consistent stop-losses well before margin thresholds and moderate leverage. Anyone who never risks more than a small percentage per trade practically never comes close to maintenance limits.