What is a margin call in forex?

A margin call in forex is a warning: your margin level has fallen to the level your broker set as its margin call level. In MT5 it is a state of the account, not an action. Nothing is closed at that point; positions are closed at the lower stop-out level if the market keeps moving against you.

Margin call vs stop-out

Both levels are in your broker’s account terms, as a margin level percentage or, on some accounts, as an amount of money (MQL5 account properties). For retail CFD clients of EU brokers, the rules ESMA set in 2018, now applied by national regulators, fix the stop-out at 50% of the minimum required margin, per account. The margin call level is the broker’s choice.

A worked example

At 1:500 the same position would need $90.00 of margin, and the margin call would be much further away. The loss per pip would still be $4. Leverage moves the margin call, not the loss per pip. The margin calculator shows the margin level of your own position and how far price can move before a stop-out.

Where you see it in MT5

In the Trade tab (View → Toolbox → Trade), the account line with Balance, Equity, Margin, Free margin and Margin level turns red when the account is in the Margin Call or Stop Out state (MetaTrader 5 help). The Strategy Tester lets you set both levels, in money or in percent, so an EA can be tested against your broker’s figures (Strategy Tester help).

Common mistakes

• Treating the margin call as a safety net. It warns that the margin is nearly used up, not that the loss you planned for a trade has been reached. On a lightly margined account it can come only after most of the equity is gone.
• Counting on the warning to arrive in time. A fast move or a weekend gap can take the margin level past the call level and the stop-out level before you can react.
• Adding funds to keep a losing position open. It moves the stop-out further away, which also lets the same position lose more money before it is closed.

Why forex traders lose money covers leverage and forced close-outs in more detail.

Margin calls and PipWarden

PipWarden’s margin check runs before an order goes in, not after a margin call. Before every order it sizes the trade from your risk percentage and the stop, and by default skips it as “Not enough free margin” if free margin after the order would fall below 20% of equity. Once the daily loss limit, 5% by default, is reached, no new trades open for the rest of the UTC day.

These checks decide what is opened. They do not close open trades when the margin level falls: those run to their stops, and the broker’s stop-out still applies. The kill switch, when you use it, closes every position the bot opened at the prices available at that moment.