Forex Margin Call Trading Calculator

The margin call calculator is a tool that helps traders determine when the next margin call will happen based on their recent trade, funds borrowed and the maintenance level. A margin call is triggered when an investor’s account value falls below the required minimum and the broker demands additional deposit. A margin call calculator is essential for anyone trading stocks, forex, or crypto with borrowed funds because it helps predict potential margin calls and manage risks.

This guide explains how to use our margin call calculator to project your next margin call, improve profit potential, and maintain better risk control.

Specifications of the Margin Call Calculator:

Here are some of the primary specifications of the WR Trading margin call calculator:

• Account Balance/Free Margin: This is the total money left in your trading account before you open a trading position. It determines how many positions you can trade and the type of securities you can afford.
• Leverage: You can leverage a high position even with a smaller investment. Leverage is usually expressed as a ratio, and a high leverage usually has a greater effect on your trading balance. 
• Lot Size: This is a unit of measurement in margin trading and usually varies from the standard, mini, and micro-lots.
• Margin call level: This is a percentage at which the broker signals a margin call. At this level, the trader needs to deposit more money to cover the securities and maintain the trading position. 
• Required Margin: This is the minimum margin capital set by the broker. It ensures you have the necessary funds to set a position based on the trade size and leverage. 
• Margin Call at Balance: This is your account balance at the point of a margin call. It is usually determined by the required margin, margin call level, and account balance. 

How To Use The Margin Call Calculator? 

The margin call calculator helps you predict the next margin call level. To begin the calculation, enter the initial margin required and other trading parameters, such as account balance, leverage ratio, and trade size. It is important to use the actual figure set by your broker to get the right result. 

After you’ve entered all the correct data, you can click on calculate, and our trading calculator will automatically measure the margin call price. It shows the balance required to open a position and the price point when a margin call is likely.  

What Is A Margin Call?

The margin call is a trigger that goes off whenever a trader leverages their position below the minimum account value required for a trade. It allows investors to borrow funds from the broker to make trading investments instead of using their personal money. Many brokers will determine the margin call price before you start trading. 

Whenever there is a margin call, the securities and account value drop, so you no longer meet the minimum threshold. Before the margin call happens, many brokers warn investors to sell their portfolio or deposit more funds into the trading account. 

When Does A Margin Call Happen? 

A margin call is a response when an investor trades a position below the minimum level required. It happens when the account value drops below the maintenance margin, which was fixed by the broker. 

Whenever the account value drops, the investor who has gotten a margin call has to either pay more money into their trading account or sell off securities to revive the margin level. It helps ensure that traders do not lose more assets than they borrowed from the broker. 

How To Calculate The Margin Call Manually

Usually, a margin call occurs when the account value drops below the margin level fixed by the broker. You can use the margin call calculator to automatically predict when a margin call is likely to happen, or you can manually calculate the margin call using the formula below.

Margin Call = (Current Market Value – Initial Margin) / Maintenance Margin

Where:

• Current Market Value = Current value of the position
• Initial Margin = Initial deposit required to open the position
• Maintenance Margin = Minimum amount required to maintain the position

For example:

Suppose you buy 100 shares of XYZ stock with an initial margin of $10,000 and a maintenance margin of 30%. If the current market value of the stock falls to $7,000:

• Margin Call = ($7,000 – $10,000) / 0.30 
• Margin Call = -$3,000 / 0.30 
• Margin Call = -$10,000

Since the result is negative, it indicates that the account balance has fallen below the required margin level, triggering a margin call.

Initial Margin vs Maintenance Margin in the Calculator 

The initial margin is the minimum rate every investor must deposit before accessing the trading market. You won’t get a margin loan to purchase securities without this deposit. 

On the other hand, the maintenance margin is the minimum deposit that traders must keep in their trading accounts to keep their trading positions open.