Margin call

Open positions are revalued on every tick, so account equity moves with them while used margin stays fixed. The ratio between the two is the margin level, and a firm sets a threshold on it at which it notifies the account holder. That notification is the margin call. It is a status message about a percentage, not an instruction, and it names no course of action.

Three properties of the call are widely misunderstood. The threshold is set by the firm and stated in its terms, so it differs between providers and is not a market standard. The notification is a courtesy in most retail contracts rather than a contractual guarantee, and the terms usually say so: a firm is not obliged to reach anybody before acting. And the call carries no deadline of its own, because the level that triggered it keeps moving with the market after the message is sent.

The call is also not the close-out. It sits above the level at which a firm closes positions automatically, so it exists as a gap between a warning threshold and a stop out level. How much room that gap represents in money terms depends on the size of the open positions, and in a fast market the distance between the two thresholds can be crossed inside a single move, which is the circumstance in which a call and a margin close-out arrive together.