What is a margin call?
Margin calls only occur when you trade with leverage, as with spread bets and CFDs. In both products, you deposit a fraction of a position's full value as margin, which means losses accumulate on the full position size, not just your deposit. When those losses erode your account equity sufficiently, the margin call threshold is triggered.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with us. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
How is margin level calculated?
Margin level is the core number that determines when a margin call occurs:
Margin level (%) = (Account equity / Used margin) x 100
Account equity = Account balance + floating profit or loss on open positions
Used margin = Total margin required across all open positions
Example: you have a £2,500 account and open a EUR/GBP position requiring £600 margin. Your used margin is £600 and your margin level is (£2,500/£600) x 100 = 416.7%. The market moves against you by 235 pips, generating a floating loss of £200. Your equity falls to £2,300 and your margin level drops to (£2,300/£600) x 100 = 383.3%. At 100% margin level, no new positions can be opened. If losses continue to the close-out level, positions are liquidated automatically.
What happens when you receive a margin call?
At IG, when your margin level falls to 100%, you cannot open new positions. This is the first warning threshold. If you do nothing and losses continue, your margin level will decline further until it hits the close-out level, at which point IG may begin closing your positions to bring the account back above the minimum margin requirement.
The close-out process is automated. You will not necessarily receive a second notification before positions are closed. The order in which positions are closed is at the broker's discretion, often starting with the most liquid or the largest position. You are responsible for any losses that result, including any deficit on your account if losses exceed your balance. This is why risk management tools, particularly stop losses, must be set before opening any leveraged position.
Margin requirements by asset class
The FCA sets minimum margin rates for retail clients on leveraged products. Different asset classes carry different minimum margins, reflecting their underlying volatility:
Asset class | FCA minimum margin rate | Example: £10,000 position requires |
Major forex pairs (EUR/USD, GBP/USD) | 3.3% | £330 margin |
Major equity indices (FTSE 100, S&P 500) | 5% | £500 margin |
Gold | 5% | £500 margin |
Other commodities (oil, silver) | 10% | £1,000 margin |
Individual shares (major) | 20% | £2,000 margin |
Crypto (via CFDs) | 50% | £5,000 margin |
Source: FCA Product Intervention Rules, retained in UK law post-Brexit. Brokers may set higher margin rates than these FCA minimums. Professional clients may access lower margin rates with higher close-out thresholds.
How to avoid a margin call: six strategies
1. Always set a stop loss
The most direct way to prevent a margin call is to ensure your position is automatically closed at a predetermined loss level, before it erodes enough equity to trigger the margin threshold. A guaranteed stop loss executes at your exact level regardless of market gaps or volatility. Set stops before opening every position, not after.
2. Do not use maximum leverage
Just because the FCA permits 33:1 leverage on major forex pairs does not mean you should use it. Many professional traders use effective leverage of 5:1 to 10:1 to leave buffer in their account. Using 33:1 leverage means a 3% adverse move eliminates all your margin. Using 5:1 leverage means a 20% adverse move is needed to cause the same damage.
3. Keep a cash buffer
Maintain a meaningful amount of free cash in your account above and beyond the margin required for open positions. This buffer absorbs adverse price moves without immediately triggering a margin call. A common rule: keep at least twice the required margin as free equity in the account. This gives you room to respond if markets move against you.
4. Reduce position size in volatile markets
Before high-impact events such as central bank decisions, non-farm payrolls or earnings releases, consider reducing open positions to lower the margin consumed. Markets can move sharply during these events. Reducing exposure before the uncertainty resolves preserves account equity even if the outcome is adverse.
5. Monitor your account actively
Set up price alerts for markets where you hold open positions. Check your margin level regularly, particularly if you hold positions overnight or over weekends when significant gaps can occur. Our trading platform allows you to monitor margin level in real time and set alerts if it approaches a critical threshold.
6. Understand your markets before trading
Each asset class has different volatility characteristics. A position on a highly volatile small-cap share or an exotic forex pair can move significantly more against you than a position on the FTSE 100 or EUR/USD. Matching leverage to volatility, using tighter stops on more volatile markets, is fundamental to avoiding margin calls. If you are new to leveraged trading, start with a demo account to understand how margin works in practice before risking real money.
Margin call FAQs
What is a margin call?
A margin call is a notification from your broker that your account equity has fallen below the required maintenance margin level. It means your leveraged positions have accumulated losses that have eroded your account balance. You must either deposit more funds or reduce/close positions, or the broker may liquidate positions automatically.
What happens if you ignore a margin call?
If you ignore a margin call and do not deposit funds or reduce positions, your broker will automatically close positions once the margin level hits the close-out threshold. This crystallises your losses. In extreme cases, if markets gap past your stop loss, you can lose more than your account balance and owe the broker additional funds.
How do I check my margin level?
Log into your account and look at the 'account summary' or 'positions' section of the platform. Margin level is typically displayed as a percentage. At IG, a margin level of 100% means no new positions can be opened; a further decline to the close-out level triggers automatic liquidation.
Can I get a margin call on a spread betting account?
Yes. Spread betting accounts use margin in the same way as CFD accounts. The margin rates, margin level thresholds and close-out rules all apply to both product types. The key difference is tax treatment: spread bet profits are free from UK CGT for most residents; CFD profits may be subject to CGT.