What is a Margin Call?
A Margin Call is a demand from your broker or exchange to deposit additional funds when the value of your margin account falls below the required maintenance margin level. If you don't add funds, your position will be forcibly liquidated.
Calculate your risk: Use our Liquidation Calculator to find your exact margin call and liquidation prices before opening a position.
How Margin Calls Work
When you trade with leverage, you borrow money from the exchange:
Example: 10x Leverage Long on Bitcoin
Your capital: $1,000
Borrowed: $9,000
Position size: $10,000 (0.1 BTC at $100,000)
Maintenance margin: 5% ($500)
Margin call at: ~5% loss ($9,500 position value)
Liquidation at: ~10% loss ($9,000 position value)
Margin Call vs Liquidation
| Event | When It Happens | What You Can Do |
|---|---|---|
| Margin Call | Position value drops to maintenance margin level | Add funds or close position |
| Liquidation | Position value drops below maintenance margin | Nothing — forced closure |
The Critical Difference
- Margin Call = Warning. You still have time to act.
- Liquidation = Game over. Your margin is gone.
Margin Call Levels by Leverage
| Leverage | Approx. Price Drop to Margin Call | Approx. Drop to Liquidation |
|---|---|---|
| 2x | ~25% | ~50% |
| 5x | ~10% | ~20% |
| 10x | ~5% | ~10% |
| 20x | ~2.5% | ~5% |
| 50x | ~1% | ~2% |
| 100x | ~0.5% | ~1% |
Calculate your exact levels: Liquidation Calculator
How to Avoid Margin Calls
1. Use Lower Leverage
High leverage = small moves = margin call
Instead of 20x → use 3-5x
├── More room for price movement
├── Margin call at -10% instead of -2.5%
└── Sleep better at night
2. Set Stop-Losses BEFORE Margin Call
Entry: $100,000 BTC
Leverage: 10x
Margin call: ~$95,000
Liquidation: ~$90,000
Set stop-loss at: $96,000-$97,000
├── Loses 3-4% of margin
├── NOT 100%
└── Capital preserved for next trade
3. Monitor Your Positions
Most exchanges show:
- Current margin ratio
- Distance to margin call
- Distance to liquidation
Check these regularly, especially during high volatility.
4. Keep Reserve Capital
Don't use 100% of your capital as margin. Keep reserves to:
- Meet margin calls if needed
- Average down strategically
- Avoid emotional decisions
Exchange-Specific Margin Call Rules
Binance Futures
- Maintenance margin varies by position size
- Margin call at 100% margin ratio
- Liquidation at maintenance margin breach
- Cross margin uses entire balance
Bybit
- Similar to Binance
- Offers insurance fund protection
- ADL (Auto-Deleveraging) as final backstop
OKX
- Tiered maintenance margin
- Multiple warning levels
- Portfolio margin for advanced users
What to Do When You Get a Margin Call
Option 1: Add Margin
Pros:
├── Keeps position open
├── Moves liquidation further
└── Can recover if price reverses
Cons:
├── More capital at risk
├── May throw good money after bad
└── Emotional decision trap
Option 2: Close Position
Pros:
├── Locks in the loss
├── Preserves remaining capital
├── Removes stress
└── Can re-enter at better price
Cons:
├── Realizes the loss
└── May miss recovery
Option 3: Reduce Position Size
Middle ground:
├── Close part of position
├── Reduces margin requirement
├── Keeps some exposure
└── Balances risk/reward
Margin Call Statistics
Research shows that traders who receive margin calls:
- 78% experience full liquidation within 24 hours
- 95% of retail traders lose money with leverage
- Average time from margin call to liquidation: 4 hours
Why DCA is Safer Than Leveraged Trading
For most investors, DCA (Dollar-Cost Averaging) on spot markets eliminates margin call risk entirely:
| Factor | Leveraged Trading | DCA on Spot |
|---|---|---|
| Margin call risk | HIGH | ZERO |
| Liquidation risk | HIGH | ZERO |
| Maximum loss | 100% of margin | Only if asset → $0 |
| Stress level | Very high | Low |
| Time required | Constant monitoring | 15 min/week |
Start stress-free investing: DCA Calculator — no margin calls, no liquidations.
Common Margin Call Mistakes
❌ Ignoring the Warning
Hoping price will reverse is not a strategy. Act immediately.
❌ Adding Margin Without Analysis
Adding funds just delays the problem if trend continues against you.
❌ Using All Available Funds
Leaves you with no options if situation worsens.
❌ Emotional Revenge Trading
After a margin call, don't immediately open a new leveraged position.
FAQ
What's the difference between margin call and liquidation?
Margin call is a warning to add funds. Liquidation is forced position closure. You have a window between them to act.
Can I get a margin call on spot trading?
No. Margin calls only occur when trading with borrowed funds (margin/futures). Spot trading with your own money has no margin calls.
How quickly do I need to respond to a margin call?
As fast as possible. In volatile crypto markets, you may have minutes to hours before liquidation. Some exchanges give specific time limits.
Does the exchange notify me of margin calls?
Yes, via app notifications, email, and SMS (if enabled). But don't rely solely on notifications — monitor your positions.
Can I set alerts before margin call level?
Yes! Most exchanges allow custom alerts at any margin ratio. Set them at 150-200% to get early warnings.
This article is for educational purposes only. Leveraged trading carries extreme risk of loss. Only trade with funds you can afford to lose entirely.
Related Terms
Derivative contracts to buy or sell cryptocurrency at a predetermined price in the future. Allow trading with leverage and opening short positions.
Borrowed funds to increase position size. Multiplies both profits and losses. High-risk instrument.
Forced position closure on an exchange when losses reach the collateral amount. Occurs when trading with leverage.
Buying and selling cryptocurrency with immediate delivery. The simplest and safest type of trading for beginners.
An automatic order to sell an asset when it reaches a certain price. Used to limit potential losses.