Margin Call Definition – What is Margin Call? | CFI

margin call

At cfi you trade with what is called a margin account. margin is the term used when we refer to the money required to open and maintain a leveraged position in a trading account. we use the term margin call to describe the notification sent to a trader to inform them that the margin/funds in their account have dropped past the minimum amount required (usually because of a losing trade) to keep a trading position open. when this happens, the trader has two options, fund the account some more or close the position to reduce the maintenance margin required.

 

Leverage is used on margined accounts which means the amount of money you have in your account allows you to buy or sell positions that are bigger in value than the actual funds available in your balance. for example, $1,000 allows you to open a position of $100,000 which is effectively, 100 times the amount you have deposited.

 

Sometimes ‘on margin call’ can also be used as a phrase, meaning your trading funds are below the minimum margin requirement to maintain the open position. if you deposit some more money into your account it will stay open, if you do not however the position will be closed and any losses you have incurred will be fulfilled.

 

Example of a margin call

You will receive a margin call if the capital in your trading account falls below 100% of your maintenance margin – usually you will be notified of this via email. we start to close positions if your margin falls below 50% of the required capital.

 

key takeaways

  • When a margin call occurs, the trader needs to decide if he/she will either deposit more money or close the position.
  • You will receive a margin call if the capital in your trading account falls below 100% of your maintenance margin and you will need to bring it up to the minimum maintenance margin.
  • Trading on margin accounts carries a high level of risk.

 

Learn more about margin calls

Discover cfi's margin requirements and margin call procedure.

Credit Financier Invest (Mauritius) Ltd is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
Credit Financier Invest (Mauritius) Ltd has regulated subsidiaries in
London • Larnaca • Beirut • Amman • Dubai • Port Louis
Credit Financier Invest

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We would like to remind that while we endeavour to provide best possible services, CFI provides execution only services and any information, reports, opinions, commentary or other materials he receives from CFI directly or from its employees or through any analytical tools provided to him or third party research provided to him from the Company shall not be deemed as investment advice and it cannot be relied upon to make investment decisions. The Client commits to make his own research and from external sources as well to make any investment. The Client accepts that CFI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The contents of any report provided should not be construed as an express or implied promise, as a guarantee or implication that clients will profit from the strategies herein, or as a guarantee that losses in connection therewith can, or will be limited.


Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. Credit Financier Invest (Mauritius) Ltd provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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