Every broker requires a minimum margin to execute a position when your margin falls below those requirements, the broker will then liquidate your positions, this is known as ‘Margin Call’. The broker protects your balance from falling to a negative balance, that’s when there isn’t enough margin to hold all your losses.

It is also important to understand how the **margin call** works – as there are a lot of calculations involved. It’s best to use one of the **MetaTrader’s platforms** to no exactly how the margin call is determined – like understanding how the **Margin Level** works.

When there are no positions opened your balance will be the same as your equity, and your profit/losses will be at 0 (zero). It is always wise to leave enough room (margin) to avoid Margin Calls. Enough Margin will hold your losses as well. Here are the formulas used to calculate the Margin Level.

**Margin Level (% – in Percentage) = Equity / Used Margin****Equity = Used Margin + Free Margin ( “Free Margin” is withdrawable while there are no open positions)****Equity = Balance + Profit – Loss**

**Margin Call** is determined by a broker, and your broker might determine it by 8% Margin Level, if your equity equals **used margin x 8%**, Margin call will definitely happen – this is also realized when your open positions close one by one until there’s enough margin to cover your losses – you will be able to see this on MetaTrader, as you won’t need to make your own calculations – it’s been calculated for you on the trade tap of your MT account.

You’ll realize this when you open a position, you’ll be able to see your margin level percentage. Know your broker’s minimum margin level, and on the above example, margin level should be above 8%.

**NOTE: if your margin level is less or equal the broker’s minimum margin level, Margin Call will happen – and that’s what we don’t need. **What you should keep in mind is that Metatrader uses 100% margin level, since when **Used Margin = Equity**, Margin Call happens.

**Example**

**Trader**‘s Initial deposit: $400**Buys GBP/USD**at**1 mini lot**(10000 units) with a Leverage: 1:500- Margin Requirement: 10000 x 0.002 x 2.0000 = $40
- Hence this is called a good faith deposit.
- The broker will temporarily hold $40 as Margin.

It is advisable to know the ins and outs of **all types of margins**, and how they work and so, you can be able to estimate the amount of margin needed to hold your losses.

**Here’s another example:** (Margin Level System) Imagine if the broker determines Margin call at 7% if the equity approaches 7%, **Margin Level = 7% x Used Margin = 7% x $40 = $2.**

Margin Call will happen if the equity falls to **$2** or less – bear in mind that this means **$400 – $2 = $398** margin (This is what’s left to hold your losses)

**Equity = Used Margin**

In this case, if the equity approaches **100% Margin Level**, Margin Call will happen if the equity falls to or less than **$40**.

This means **$400 – $40 = $360** (Now this amount left is your Margin left to hold your losses)

Now that you got a hang of the Margin Call, it’s best that you learn other terms like *Stop Loss, Take Profit, Trailing Stop*,* Hedging and Averaging*, and other techniques. Let’s make trading our everyday’s lives.