Guide · Risk Management
What Is a Margin Call? The Moment Leverage Stops Being Free
Leverage lets you control more than your capital covers — right up until a loss shows up. A margin call is the broker's demand to either add money or watch the position get closed for you.
Trading on margin means borrowing money from a broker to open a larger position than your own cash would allow, using your existing account balance as collateral for the loan. It amplifies both gains and losses relative to the capital actually put up — a defining feature of leverage, not a side effect.
A margin call happens when losses on a leveraged position bring the account's equity down below the broker's required minimum — the level needed to keep the loan adequately collateralized. At that point, the broker demands the trader deposit more funds to bring the account back above the minimum, or close out part of the position voluntarily.
If the trader does neither in time, the broker has the right to liquidate positions automatically, without further permission, to protect its own loan — often at the worst possible moment, since forced liquidations tend to happen during exactly the kind of sharp move that triggered the margin call in the first place. This is why leveraged losses can exceed the amount originally put up: the borrowed portion has to be repaid regardless of how the trade turned out.
It's also why Trade2Spike's simulated modes intentionally work differently — Fast Binary risks only the fixed stake per trade, and Spot Trading and Long Term never use borrowed capital, so a losing position can bring the simulated balance to zero, but never below it. Understanding a margin call in theory, without ever facing one with money that can't be replaced, is exactly what the simulator is for.