Forex Trading Blog | Free Forex Signals

The term Margin Call comes from Stock Market. It is essentially a phone call from the Stock broker asking you to put more funds in your account to sustain the open position losses. At this stage trader is required to put more money in the account usually with in 24hrs or else the position would be closed at a loss. This loss can very well exceed the total account balance and you may still need to pay Stock broker for the remaining losses. The situation is worsen when you use leverage to borrow money from the stock broker.

In the Forex market Margin Call works in a slightly different manner. First off all there is no phone call from the broker. Soon after the message all or some of your open positions will be closed to free up some the margin that was put aside when you open the position.

The only good thing about Margin Call in Forex market is that you won’t lose more money than your total account balance. Most brokers would close out all your positions before you run out of balance in your account. However in some cases where price gaped after the weekend may result in loss beyond your account total balance. I would recommend to check with your broker to find out about their policies regarding Margin Call.

You may also want to read about Forex Leverage.