What is a margin call? What happens when a leveraged trade goes wrong
By SendPay Business · · 2 min read
When you trade with leverage, you only put down part of the trade's value, called margin. A margin call is the warning a broker gives when losses eat into that margin: add more money, or the broker may close your trades.
A simple example
You open a £10,000 currency trade with 30 to 1 leverage, so you put down about £333 of margin. If the price moves against you by around 1.7%, the loss is about £167, half your margin. At that point a UK broker must start closing your positions for a retail account, even if you think the price will recover.
What happens next
- The broker warns you that your margin is running low.
- You can add money or close some trades yourself.
- If your margin falls to the close-out level, the broker closes trades automatically.
- Any loss is taken from your account balance.
UK protections
FCA rules for retail CFD and spread-betting clients include a margin close-out at 50% of the required margin, and negative balance protection, so you can't lose more than the money in your account. Leverage still means losses can arrive fast.
Where SendPay fits
SendPay doesn't offer leveraged trading, CFDs or margin accounts. SendPay platforms let customers hold and exchange GBP, EUR and USD, and buy, sell and hold crypto without leverage, with assets held by regulated partners.
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.