Margin calls and stop-out levels: calculate your account buffer

Margin call versus close-out: two different events

Traders often use 'margin call' and 'stop-out' interchangeably, but they describe different things. A margin call, in the sense used by providers such as IG, is a warning or account status that appears when account equity drops below the margin requirement, after which positions risk automatic closure. A close-out or stop-out is the point at which the provider actually closes one or more positions under the account rules. The distinction matters because the second event does not wait for permission, confirmation or a second warning. [4]

You cannot rely on receiving a warning first. IG states that fast market movement can prevent contact before closure begins, even though it aims to notify clients at defined stages on its standard accounts. Treat every notification as potentially delayed, missed or overtaken by price movement, and monitor the live account figures yourself. [4]

The numbers on your dashboard: definitions that vary by platform

CFD platforms use different labels and sometimes different formulas for the same concept. The definitions below are generic starting points; your provider's current terms and interface definitions control in any dispute or reconciliation.

• Cash balance: the realised funds in the account, including deposits, withdrawals, realised profits and losses, and booked charges such as financing or commission.
• Unrealised profit or loss: the current mark-to-market result of open positions, which changes continuously until positions are closed.
• Account equity or revaluation amount: commonly cash balance plus net unrealised profit or loss. CMC defines its account revaluation amount as cash plus net unrealised profit/loss on its execution page. [6]
• Notional exposure: the full value of the position being controlled, not the margin posted. Profit and loss are calculated on this full exposure.
• Position margin: the collateral required to open or maintain a position. CMC calculates position margin as a percentage of full position value. [7]
• Used margin: the total margin currently committed to all open positions.
• Free or available margin: what remains of equity after used margin. It may govern whether new positions can be opened.
• Margin level or coverage percentage: equity expressed as a percentage of required margin.
• Margin call: a warning stage or status indicating equity has fallen below the margin requirement. [4]
• Close-out or stop-out: the contractual or regulatory threshold at which the provider closes one or more positions. [1] [2]
• Negative-balance protection: within the scope of the UK retail CFD rules, protection ensuring a client cannot lose more than the total funds in the CFD account. [1]

What leverage actually means for your money

Leverage lets you control a notional exposure larger than the margin you post. Margin is not a fee and not a loss limit. Your profit or loss is calculated on the full exposure, so a small percentage price move can produce a large change relative to your account. The margin only determines how much collateral must remain available to keep the position open. This is why an account can move from comfortable to close-out territory over a distance that looks small on the price chart. [7]

Reconciliation formulas, subject to your platform's definitions

Use these formulas as indicative checks, then resolve any mismatch against the provider's terms and statement rather than assuming the platform display is wrong or right.

1. Indicative equity = cash balance + net unrealised profit/loss +/- booked credits or charges (financing, commissions, conversion costs).
2. Free margin = equity - required margin.
3. Indicative coverage = (equity / required margin) x 100.

If your own calculation differs from the platform, check the statement timestamp, the account currency, whether financing has been applied, whether a pending withdrawal or deposit is reflected, and whether the provider uses a different definition of required margin. Do not trade on a figure you cannot reconcile.

A worked example: proximity to the threshold

The following arithmetic is a labelled hypothetical for illustration only. It does not prescribe a buffer, a leverage ratio or any trading decision.

• Cash balance: £5,000.
• Total required margin across open positions: £2,000.
• Net unrealised loss: £3,600.
• Indicative equity: £5,000 - £3,600 = £1,400.
• Free margin: £1,400 - £2,000 = negative £600.
• Coverage: (£1,400 / £2,000) x 100 = 70%.

At 70% coverage, equity is already below the £2,000 required margin in this example, although the exact warning status remains provider-specific. If equity falls further to £1,000 against the same £2,000 requirement, coverage reaches exactly 50%, the close-out level that applies to covered UK retail CFD accounts under the FCA rules and is described by ESMA in its EU measure. The example demonstrates the arithmetic between a provider's warning stage and the scoped regulatory close-out point; it does not prescribe an acceptable buffer. [1] [2]

The threshold moves toward you from both sides

Close-out risk is usually discussed as falling equity, but the denominator matters just as much. Required margin can rise while prices are flat if the provider increases the margin rate, if a position crosses into a higher tiered-margin band, or if you add exposure. IG explicitly warns that margin requirements can change, making existing equity insufficient. CMC's margin page shows share CFDs using tiered margin rates, where each portion of position size is charged at the relevant tier, which is also why summing notional multiplied by a single headline rate can give the wrong answer for a tiered product. [4] [7]

This means a buffer calculated today can shrink without any adverse price movement. Recalculate whenever your provider announces a margin-rate change, when a position grows large enough to cross tiers, and when adding correlated positions that increase total required margin. [4] [7]

Why zero free margin is not the same as close-out

When free margin reaches zero, a platform may block new positions or show a warning status. That is not necessarily the contractual or regulatory close-out calculation. On covered UK retail CFD accounts the FCA rule triggers when funds fall to 50% of the margin needed to maintain open positions, which corresponds to 50% coverage, not zero free margin. A zero-free-margin state can therefore precede close-out or coincide with a provider-specific warning stage. Do not assume a single cross-platform warning threshold; read your provider's terms for the exact trigger and any published notification stages. [1] [4]

Close-out is calculated per account, not per position

Both the FCA rule and ESMA's description operate at account level. ESMA explains that if total margin in a retail CFD account falls below 50% of the initial margin required for open CFDs, the provider must close one or more CFDs. The rule standardises a minimum level of protection per account rather than per individual position. [1] [2] [6]

Two consequences follow. First, a profitable trade can be closed if the account as a whole breaches the threshold, because the calculation aggregates the whole book. Second, the rule requires the provider to close one or more positions; it does not mandate closing the largest loser first, nor does it require liquidating everything in a fixed sequence. Which positions go first depends on the provider's method, described next. [1] [2]

Which positions get closed first: a dated platform example

CMC's execution page, as accessed on 24 August 2026, describes selectable close-out methods: complete close-out; most recent trade first; largest position loss first; and largest position margin first. Some methods can close a portion of a trade. These are current CMC UK platform examples, not an industry sequence, and selecting a method is not a promise about execution in every edge case. [6]

A partial closure releases some required margin and moves that portion's unrealised profit or loss into the cash balance. Equity may also change through the execution price and costs, so it should be recalculated rather than assumed. Record which method your account uses, but do not treat the selected sequence or any displayed trigger as a guaranteed execution price. [6]

Execution risk during forced close-out

A forced close-out is still an execution event. Unless a specific guaranteed order applies, the final fill depends on the prices available at that moment, including spread, gaps and market conditions. During fast markets the fill can differ materially from the level shown when the close-out was triggered. This is separate from the question of whether the threshold itself is calculated correctly; even a correctly calculated close-out can execute at worse prices than the trigger level suggests. [3]

Stops, guaranteed stops, close-out and negative-balance protection are four different things

• A normal stop-loss is a position-level instruction to exit at or near a chosen price, subject to execution conditions.
• A guaranteed stop-loss order (GSLO) protects a contractually defined exit price when triggered, typically for a charge. ESMA notes that the account-level CFD margin close-out rule includes positions with guaranteed stops or limited-risk protection, so a position carrying a GSLO can still be closed before its guaranteed-stop level is reached, especially if that level lies beyond the account's close-out point. The GSLO retains value in a market gap where ordinary close-out cannot execute without slippage. [3]
• Account close-out protects the account and provider at a threshold and can act before any individual stop is reached. [1] [2] [3]
• Negative-balance protection limits aggregate liability within its regulatory scope; in the UK retail CFD rules it applies at account level to covered retail clients. It does not save positions and does not guarantee profitability. [1]

None of these mechanisms guarantees a profitable outcome. They define different layers of protection with different scopes, and confusing them leads traders to believe a stop on one position protects the whole account. It does not. [3]

Client classification and jurisdiction change the rules entirely

The 50% close-out rule and negative-balance protection described here apply to covered UK retail CFD clients. Professional-account handling differs: IG states that professional clients can be closed at any time while on margin call, without the staged notifications described for standard accounts. ESMA's rule applies to the EU retail measure described in its FAQ and should not be extended to exchange-traded futures, shares or other jurisdictions. [1] [2] [4]

The FCA warned in October 2025 about high-pressure attempts to persuade retail clients to elect professional status and give up retail protections. Confirm your client classification and the exact protections that apply to your specific account before relying on any threshold described here. Electing professional status can remove retail protections, so the consequences must be checked independently of the sales pitch. [8]

Dashboard reconciliation checklist

Work through this list against your live platform and latest statement. Any item you cannot confirm marks the reconciliation as incomplete and should be resolved before relying on the calculated coverage.

1. Legal entity and jurisdiction of the provider you are actually dealing with.
2. Your client classification: retail or professional, and which protections attach. [8]
3. Account currency, since conversion affects both equity and margin calculations.
4. Cash balance as shown on the statement, including booked financing, commissions and conversions.
5. Net unrealised profit or loss across all open positions.
6. Total required margin, checking for tiered rates rather than a single headline rate. [7]
7. Coverage percentage as displayed, and your own recalculation of it.
8. Displayed close-out level and the exact contractual wording behind it. [1] [2]
9. Any published warning stages and their thresholds, if the provider discloses them. [4]
10. Selected close-out method, recorded in writing. [6]
11. Largest correlated exposures, since several positions can lose together.
12. All stops and guaranteed stops, with their levels and charges. [3]
13. Financing, commission and currency-conversion entries that affect the current account figures.
14. Pending withdrawals or deposits, which may not be immediately reflected in available figures.
15. Statement timestamp, so you know how fresh every figure is.

Close-out stress worksheet

Choose your own price shocks; nothing here recommends a size. The purpose is to see, before it happens, what a given move would do to coverage and what could be closed under your current method. Label the result a scenario, not a forecast.

1. Pick a price shock for each open position, sized to market conditions you consider plausible.
2. Revalue each position at the shocked price and compute the resulting unrealised profit or loss.
3. Add known costs: financing due, commissions on any closure, and currency conversion effects.
4. Recompute equity = cash balance + net shocked P/L - known costs.
5. Test a margin-rate increase, for example a rise announced by your provider, and recompute required margin including any tier crossings. [4] [7]
6. Compute coverage = (equity / required margin) x 100 and compare with your displayed close-out level. [1] [2]
7. Check correlations: identify scenarios where multiple positions lose simultaneously.
8. Identify which positions would be closed first under your selected close-out method, noting that partial closure may apply. [6]

Is adding funds the right response? The arithmetic

Depositing money raises equity and therefore coverage, but it does not reduce exposure or required margin, and it does not repair the reasoning behind any losing position. Closing or reducing positions reduces required margin and market exposure but crystallises unrealised losses into the cash balance. These are the two levers, and they work in opposite directions on different parts of the equation. Which combination suits a situation depends on facts this guide cannot assess; the point is to recognise that a deposit alone leaves the exposure unchanged.

Failure modes to check before trusting any figure

Three timestamps can explain an apparent mismatch

Record the market-quote time, the platform's close-out event time and the statement-booking time in the same timezone. They answer different questions: what price was observable, when the account rule acted and when the cash or charge was posted. IG warns that a fast move can overtake a notification, while CMC defines close-out from the account revaluation shown by its platform. Comparing a later chart snapshot with an earlier account event can therefore produce a false discrepancy even when each record is internally consistent. [4] [6]

Treat funding the same way. A transfer can be initiated, accepted by a payment provider and credited as usable account equity at different times. The dashboard, transaction receipt and statement should show which stage has occurred. Until the provider's own records show the funds in the relevant account figure, do not insert a pending amount into the coverage calculation as if it were cleared cash.

• Stale app display: refresh and verify against the statement timestamp.
• Wrong account currency assumption, distorting converted balances.
• Omitted financing or commission costs in your hand calculation.
• Tiered margin treated as a flat headline rate. [7]
• A margin-rate change announced but not yet priced into your buffer. [4]
• A pending order that creates exposure only when filled.
• Partial closures changing required margin and moving part of unrealised P/L into cash, with equity recalculated for fill and costs. [6]
• Multiple accounts that are not netted against each other.
• Wrong client classification assumed, applying retail protections that do not apply. [8]
• Weekend or overnight gaps moving prices beyond any level you tested. [3]
• Assuming a deposit is cleared and usable immediately.

Treat these as checks unless your provider's documentation establishes a specific behaviour. Keep dated screenshots and statements of your dashboard figures, selected close-out method and any provider notices, so any later discrepancy can be reconciled against records rather than memory.