Quick answer: A margin call is triggered when your margin level (equity divided by used margin, as a percentage) falls to your account’s margin call threshold. A stop out is the lower threshold at which the platform starts closing your positions automatically. Both thresholds are set per account, so the only numbers that apply to you are the ones in your own account terms.
Many traders first meet a margin call the expensive way: a position open at lunch is gone by evening, closed at a price nobody chose. The cause is rarely a mystery. Margin level is one ratio, recalculated on every tick, and it moves predictably once you know the three numbers that feed it.
What Is Margin in Forex? Used Margin, Free Margin and Equity
Margin in forex is the part of your money the platform locks as collateral while a position is open. It is not a fee and it is not spent; it comes back when the trade closes. How much one lot locks depends on your account’s leverage ratio, covered on the Fees & Leverage page.
Your MT4 or MT5 Trade tab shows the figures that matter:
- Balance: closed-trade money, ignoring open positions
- Equity: balance plus or minus floating profit or loss
- Used margin: collateral locked by open positions
- Free margin: equity minus used margin, the room left for losses or new trades
Equity is the live number. Balance only changes when a trade closes, so it can look healthy while an open loss eats the account. When free margin reaches zero, equity exactly equals the collateral held and you have no room left.
The Margin Level Formula
Margin level expresses equity as a percentage of used margin. It is the figure every threshold is measured against.
Margin level = Equity ÷ Used margin × 100
| Item | Value |
|---|---|
| Balance | $5,000 |
| Floating P/L | −$400 |
| Equity ($5,000 − $400) | $4,600 |
| Used margin | $1,150 |
| Free margin ($4,600 − $1,150) | $3,450 |
| Margin level ($4,600 ÷ $1,150 × 100) | 400% |
A 400% reading means equity covers the locked collateral four times over. At 100%, equity and used margin are equal and free margin is zero. With nothing open, there is no used margin and no reading at all.
The ratio falls from two directions. Losses shrink the top of the fraction; new positions enlarge the bottom. Traders watch the first and forget the second, which is how an account that has barely moved can still hit its threshold.
What Happens at Each Threshold
At the margin call threshold, most brokers warn that forced closure is near. At the stop-out threshold, the platform closes positions for you, one at a time, until the ratio recovers or nothing is left open.
A conventional warning leaves you a choice: reduce positions or add funds. The stop out removes it. The server closes a position at market, recalculates, and repeats while the ratio stays below the line. On most MetaTrader setups the position with the largest floating loss goes first, since it frees the most margin. The exact rule is configured on the broker’s server.
When we reviewed the FXPrimus Client Agreement (September 2025 version, checked October 2026), three details differed from the textbook picture. The agreement uses “Margin Call” for the forced closing itself, triggered when equity drops below required margin. It describes closing as fully electronic, with no discretion over which trade goes first. And it states that FXPrimus is “not responsible to notify the Client” when this happens. Your own eye on the ratio is the warning system.
The agreement also flags a less obvious trigger: spreads can widen around the daily bank rollover, enough to stop out even a fully hedged account.
Worked Example: Watching Margin Level Fall
The thresholds below are illustrative only (100% and 50%) and are not FXPrimus levels. Check your own account’s figures before applying the arithmetic.
Setup: $2,000 deposit. Buy 1 lot of EUR/USD at 1.1700 on a 1:200 leverage ratio. Used margin is $585 (100,000 × 1.17 ÷ 200), each pip is worth $10, and the starting ratio is 341.9%.
| Adverse move | EUR/USD | Equity | Free margin | Margin level | Status (example thresholds) |
|---|---|---|---|---|---|
| 0 pips | 1.1700 | $2,000 | $1,415 | 341.9% | Open |
| −30 pips | 1.1670 | $1,700 | $1,115 | 290.6% | Open |
| −60 pips | 1.1640 | $1,400 | $815 | 239.3% | Open |
| −100 pips | 1.1600 | $1,000 | $415 | 170.9% | Open |
| −141.5 pips | 1.15585 | $585 | $0 | 100.0% | Margin call |
| −170.75 pips | ≈1.1529 | $292.50 | −$292.50 | 50.0% | Stop out |
The first 100 pips cost $1,000 yet leave the ratio above 170%, which can feel safe. Meanwhile the gap between the two example thresholds is only 29.25 pips, a distance a major pair can cover in minutes after a central bank decision. Treat the first threshold as the last exit, not an early warning.
Where to Find Your Own Account’s Thresholds
FXPrimus sets both levels per account type, so PrimusCLASSIC figures may differ from PrimusPRO or PrimusZERO. MT4 and MT5 show your live ratio in the Trade tab but generally not the broker’s thresholds, so look them up.
Check the account type page and client portal first, then the Client Agreement and contract specifications under Legal Documents. The 24/5 support team can confirm the levels for your login; ask for both percentages and the closing order.
Recheck periodically. The agreement allows FXPrimus to raise the stop-out level or margin requirements without prior notice, for example before high-impact news. On PrimusCLASSIC, the maximum leverage ratio also steps down as equity grows past set tiers, which raises used margin on the same position, so a profitable account can see its ratio drop without a losing trade.
Once you have both numbers, convert them into prices for your open positions and write them next to your trade plan.
Four Common Causes of Margin Calls
Oversized positions
Size sets the starting ratio, and the starting ratio sets your room. On the same $2,000 account and 1:200 leverage ratio, 3 lots open at 114%: the 100% example line sits 8.2 pips away and the 50% line 37.4 pips away. At 0.2 lots the account opens at 1,709%, with the 100% line 941.5 pips away. The pip calculator shows the money value of a move before you pick a size.
No stop loss
Without a stop, a floating loss has no ceiling except the stop out, which then becomes your exit at whatever price the server reaches. A stop-loss order closes the trade at a level you chose while the ratio is still high.
Adding to losing positions
In the walkthrough, suppose the trader buys a second lot at 1.1600 to average down. Used margin rises to $1,165 against equity of $1,000, so the ratio drops at once to 85.8%, already under the 100% example line. Each pip is now worth $20, and the 50% line is about 21 pips away instead of 70.75.
Weekend and news gaps
Forex reopens on Monday at whatever price the weekend produced, and a stop fills at the first available price, which can be far past your level. The ratio can fall through both thresholds in one tick. Negative Balance Protection, which the company states applies to every live account, resets a negative balance to zero; it does not prevent the loss.
How to Keep Your Margin Level High
Position size should come from stop distance and risk per trade, not from how much free margin the platform shows. In the walkthrough, a 50-pip stop on the 1-lot trade caps the planned loss at $500, and even at that worst case the ratio sits at 256%, far from either example line. That is the practical link between risk management in forex and margin.
A few habits protect the buffer. Count correlated trades as one position, since long EUR/USD and long GBP/USD usually lose together. Reduce exposure before weekends and scheduled high-impact releases. Check the ratio yourself at set times instead of waiting for an alert. When it falls, closing part of a losing position frees margin; a deposit only delays the same arithmetic.
None of this makes forced closure impossible. Gaps, spread widening and changed margin requirements can still reach an account. The aim is to make that outcome rare and survivable.
Margin Call FAQ
What is a margin call in forex?
It occurs when your margin level falls to your account’s threshold. Most brokers treat it as a warning that forced closure is near. FXPrimus’s client agreement uses the term for the forced closing itself, so check how your account terms define it.
What is the margin call meaning compared with a stop out?
In the usual sense, it is a warning level where positions stay open and you can act. A stop out is the lower level where the platform closes positions automatically, rechecking the ratio after each closure.
How is margin level calculated in forex?
Divide equity by used margin and multiply by 100. Equity of $4,600 against used margin of $1,150 gives 400%. Equity includes floating profit and loss, so the figure changes with every tick while positions are open.
What is free margin?
Free margin is equity minus used margin: the room left to absorb losses or open trades. At zero free margin, the ratio is exactly 100%.
Can margin calls be avoided completely?
No. Correct sizing, stop losses and spare free margin make it far less likely, but weekend gaps, spread widening and changes to margin requirements can still bring an account to its thresholds.
Does Negative Balance Protection prevent a stop out?
No. It resets a negative balance to zero when a stop out cannot close positions in time, for example after a gap. The closure still happens, and losses down to zero remain yours.
The Takeaway
Every margin call comes from a ratio you can calculate before every trade. Know your two thresholds, turn them into prices, and size positions from stop distance. A free PrimusDEMO account on MT4, MT5 or WebTrader lets you watch equity, free margin and margin level move before real capital is involved.
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Risk disclosure. This article is for informational and educational purposes only and is not financial advice, legal advice or tax advice. Trading forex and CFDs carries a high risk of loss and is not suitable for every investor. Past performance does not guarantee future results. The threshold percentages in the examples are illustrative and are not the levels applied to any FXPrimus account. Review the full terms and conditions, the Client Agreement and the Risk Disclosure before trading.