What Is a Margin Call? Formula, Stop Out and Real Data
A margin call is the broker's warning that the equity in your account has fallen too close to the margin locked up by your open positions. It is a threshold on a ratio, not a judgement call: when equity divided by used margin drops below a published level, the warning fires. Ignore it and the stop out follows, closing positions for you.
How it works
Equity = Balance + floating P&L of open positions
Free margin = Equity − Used margin
Margin level = (Equity ÷ Used margin) × 100
Take a $10,000 balance with two positions using $2,000 of margin and a floating loss of $1,500. Equity is $8,500, so margin level is 425%. Let that loss widen to $8,100 and equity is $1,900: margin level 95%, under a typical 100% call threshold.
Thresholds vary by broker and are always in the contract. The common pair:
| Level | Typical threshold | What happens |
|---|---|---|
| Margin call | 100% | Warning issued, no new positions accepted |
| Stop out | 50% | The platform closes positions automatically |
The sequence is fixed:
- Floating losses erode equity while used margin stays where it is.
- Margin level crosses the call threshold. Warning. New orders refused.
- Losses continue. Margin level reaches the stop-out level.
- The platform liquidates positions until the ratio is back above the threshold. Most brokers close the largest loser first.
Nothing in that list waits for you to be at your desk: a liquidation at 3am on a thin market prints exactly as if you had chosen it. The margin calculator shows how much margin a given size and leverage will actually freeze before you open anything.
Why it matters
The timing is the problem, and it is structural. A margin call arrives at the maximum of the adverse move — that is what the maximum means. Positions are closed at the worst prices of the episode, and the trade that would have recovered is closed before it does. That is the difference between a drawdown you sit through and one realised on your behalf.
The order makes it worse: closing the largest loser first means the forced exit is the position furthest from its entry.
It can also arrive without the price doing anything unusual. Swap charged overnight reduces equity, which reduces margin level, on positions you have not touched. A carry-negative basket held for months can walk itself into a call in slow motion.
What the data shows
Across the public accounts on ShowMyTrades with trading history (August 2026), 17.6% have reached a deepest drawdown of more than 50%. These are accounts published here, not traders in general.
That figure matters because of where the stop out sits. An account holding positions that use most of its equity as margin is already trading near a 100% margin level; halve the equity and the ratio is at a 50% stop out, whatever the owner intended. A drawdown past 50% does not prove a margin call happened — some of those positions were closed by hand — but it marks the population that got close enough for the broker to have a say.
Recovery is the other half of the arithmetic. Getting back to flat from −50% requires +100%, against a median time-weighted return of +3.2% across the same accounts.
Where you see it on ShowMyTrades
There is no live margin-level gauge on a public account page, but every input that drives one is visible.
- Balance and Equity in the account stats panel. The gap between them is the floating P&L that pushes margin level down. A wide negative gap is an account whose margin level is falling right now.
- The Equity Curve in the charts viewer plots both lines together. A near-vertical drop in equity that the balance line then catches up to is a loss being realised — voluntarily or not.
- Drawdown versus DD on Balance in the stats panel. The first includes open positions, the second does not. A large equity drawdown that later appears in the balance figure is the moment the floating loss was closed.
- The trades table, with its Duration and Profit (Gross) columns. A cluster of positions all closing inside the same minute, all at a loss, is the fingerprint of a stop out.
Common misunderstandings
- "Margin call and stop out are the same thing." They are two thresholds. The call is a warning; the stop out is execution. Some brokers set them close enough together that the gap is not usable.
- "I will just deposit more when it happens." Notification is not a right, and the interval between call and stop out can be seconds in a fast market. Bank transfers clear on banking time, not market time.
- "A stop loss protects me from a margin call." Only if it fills. Across a weekend gap the market can reopen far past your stop loss, and margin level can be below stop out before the first tick prints.
- "Negative balance protection means I cannot lose more than my deposit." Where it is offered and enforced, it caps the debt, not the loss. You still lose the account.
For how equity, balance and drawdown fit together on a live page, read how to read a trading account dashboard.
Related terms
Leverage
Leverage is the ratio between position size and the capital backing it. Here is the margin formula, a worked example, and drawdown data from thousands of accounts.
Maximum Drawdown
Maximum drawdown is the deepest peak-to-trough fall an account ever recorded. The formula, the recovery table, and the real spread across thousands of accounts.
Position Sizing
Position sizing turns a risk percentage into a lot size using your stop distance and pip value. The formula, the three common methods, and what bad sizing costs.