What is a margin call?

When you buy on margin, you pay part of the price and the broker lends you the rest, holding the stock as collateral. Your equity, the market value minus the loan, is the cushion that protects the broker. The maintenance margin is the minimum size of that cushion, as a share of market value. A margin call means the cushion has become too thin; it is a demand to rebuild it, not a fee.

In the US, FINRA’s minimum for long stock positions is 25% of market value. Brokers set their own house requirements on top of that, often higher, and higher again for volatile or concentrated positions, and they can change them. The figure that matters is the one in your own broker’s margin agreement.

Margin call
A broker’s demand to deposit cash or securities, or to sell holdings, because the equity in a margin account has fallen below the maintenance requirement.
Maintenance margin
The minimum equity a margin account must keep, as a percentage of the market value of its holdings. Below it, the broker can issue a margin call or sell.
House requirement
A broker’s own maintenance margin, set at or above the regulatory minimum. It can differ by security and can be raised at any time.

How is a margin call triggered? A worked example

Equity falls faster than the price, because the loan does not shrink with the stock. In the drawing at the top of the page, you buy 200 shares of hypothetical XYZ at $100, a $20,000 position, with $10,000 of your money and a $10,000 loan. Your broker’s maintenance requirement, also hypothetical, is 30%.

  • At $100: the position is worth $20,000 and your equity is $10,000, or 50%.
  • At $80: it is worth $16,000 and your equity is $6,000, or 37.5%. A 20% fall in the stock has cost 40% of your money, and there is still no call.
  • At $71.43: it is worth $14,286 and your equity is $4,286, or 30.0%, exactly the minimum.
  • At $65: it is worth $13,000 and your equity is $3,000, or 23.1%. That is a margin call. The requirement is 30% × $13,000 = $3,900, so you are $900 short.

How do you calculate the price that triggers a margin call?

Margin call price = loan per share ÷ (1 − maintenance margin). For XYZ the loan is $10,000 ÷ 200 = $50 a share, so at 30% the call comes below $50 ÷ 0.70 = $71.43, a 28.6% fall from your $100 cost. At that price the loan is exactly 70% of the market value, and your equity is the other 30%.

Work this out before you buy, because it depends on your broker. In the drawing below, the same trade is called below $66.67 at 25% maintenance and below $83.33 at 40%, only 16.7% under your cost. Interest also adds to the loan over time, so the real call price slowly creeps up.

Margin call price
The share price at which equity falls to the maintenance requirement: loan per share ÷ (1 − maintenance margin).

Turn your phone sideways to read the image. Tap to close.

A price ruler from $60 to $100, with the $100 purchase on the right and three red marks at $66.67, $71.43 and $83.33. Three cards show loan per share ÷ (1 − maintenance): 25%, $50 ÷ 0.75, call below $66.67, a fall of −33.3%; 30%, $50 ÷ 0.70, call below $71.43, −28.6%; 40%, $50 ÷ 0.60, call below $83.33, −16.7%. A note reads same trade: a higher requirement means an earlier call.

How do you meet a margin call?

At $65 the account is $900 short of the 30% requirement. The drawing below shows the three usual ways to fix it; each brings equity back to 30% of market value, and the amounts differ:

  • Deposit cash: $900 cuts the loan to $9,100 and lifts equity to $3,900, which is 30% of $13,000.
  • Deposit fully paid stock: about $1,286 of a stock with the same 30% requirement, since only 70% of its value counts toward the shortfall ($900 ÷ 0.70).
  • Sell stock: shortfall ÷ maintenance = $900 ÷ 0.30 = $3,000 of XYZ, about 47 shares. The loan falls to $7,000, the position to $10,000, and your $3,000 of equity is now 30%. Selling takes the largest amount because each dollar sold frees only 30 cents of the requirement.

Turn your phone sideways to read the image. Tap to close.

Four stacked bars, with your equity on top of a hatched loan. At $65, the call: value $13,000, equity $3,000 over a $10,000 loan, 23.1% in red. Add cash, $900: $3,900 over $9,100, 30.0%. Add paid-up stock, $1,286: value $14,286, $4,286 over $10,000, 30.0%. Sell stock, $3,000: value $10,000, $3,000 over $7,000, 30.0%. A note in red reads miss the deadline and the broker picks what to sell, often without asking.

The margin call process: what happens if you do not meet it?

Under standard US margin agreements, the broker can sell your securities without contacting you, can choose which ones to sell, and does not owe you an extension. Deadlines depend on the broker and the market, and in a fast market there may be almost none. Since June 2026, FINRA’s rules also apply the requirement during the trading day, with brokers phasing this in; see the pattern day trader rule. The usual order of events:

The worst case is a gap. In the drawing below, XYZ closes at $75 with equity at 33.3%: no call. Bad news arrives overnight and it opens at $45. The position is worth $9,000 against a $10,000 loan, so your equity is gone and you still owe $1,000 plus interest, an $11,000 loss on a $10,000 deposit. A stop order offers little help here, because the first available price is already far below it; see stop loss and take profit.

  1. The price falls and your equity drops below the maintenance requirement.
  2. The broker usually sends a notice with the amount due and the deadline, though it is not required to.
  3. You deposit cash or securities, or sell holdings to cover the shortfall.
  4. If the call is not met in time, or the market moves too fast, the broker sells enough to restore the requirement.
  5. If the sale does not cover the loan, you owe the difference.

Turn your phone sideways to read the image. Tap to close.

Daily candles falling to a $75 close, then an arrow labeled bad news overnight down to a candle at $45, below a dashed red line at $50, the loan per share. Two cards: at the close, no call, value $15,000, equity % 33.3%; at the open, in red, value $9,000, loan $10,000, you still owe $1,000, total loss −$11,000. A note reads a stop order cannot fill inside a gap.

How can you avoid a margin call?

You cannot control the price, but you can decide how far away the call price sits. Half the loan moves it a long way: with a $5,000 loan instead of $10,000, the loan per share is $25 and the 30% call comes below $35.71 rather than $71.43.

  • Borrow less than the maximum, or nothing at all.
  • Work out the margin call price before each trade, and ask whether the stock could plausibly reach it.
  • Keep spare cash in the account, ready to meet a shortfall.
  • Avoid concentrating in one volatile stock, where brokers often demand more.
  • Set a price alert above the call price and check your broker’s margin screen; requirements can rise without warning.
  • Size positions by what a bad gap would cost, not by your buying power; the position size calculator helps.