A margin call is a warning from your broker that your account balance has fallen too low to keep your open positions running. Most Australian CFD brokers will send this alert automatically — and if you don’t act fast, they may close your trades for you.
How a Margin Call Works — A Practical Example
Say you open a CFD position on the ASX 200 worth A$20,000 using 10:1 leverage. Under ASIC rules for retail clients, you’d need to put up at least A$2,000 as margin (10% of the position). Your broker sets a margin call level at 50% of that required margin — so A$1,000.
Markets move against you, and your A$2,000 balance drops to A$950. Your equity is now below the A$1,000 margin call threshold. At this point your broker sends a margin call, asking you to deposit more funds or close some positions to bring your account back above the minimum. If you don’t, the broker will likely trigger a stop-out, automatically closing your trades to limit further loss.
The exact margin call and stop-out levels vary between brokers. Some alert you at 80% of required margin, others at 100% — always check the product disclosure statement (PDS) before you trade.
Why Margin Call Matters for Australian Traders
ASIC tightened margin rules for retail CFD traders in 2021, capping leverage at 30:1 for major forex pairs and lower for other assets like crypto. These caps reduce how quickly a losing trade can wipe out your account, but a margin call can still happen fast — especially on volatile instruments like oil or BTC.
Australian brokers holding an AFSL licence must also provide negative balance protection to retail clients. This means even if a market gaps overnight and your account goes below zero, you can’t owe more than what you deposited. That said, negative balance protection kicks in after a margin call is missed — not instead of one.
A broker that handles margin calls poorly — slow alerts, unclear levels, or sudden stop-outs with no warning — can cost you far more than a well-managed one. Choosing a broker with transparent margin policies and reliable notifications is a practical risk-management step, not just a nice-to-have. You can learn more about how margin works in our CFD beginner guide.
Margin Call vs Stop-Out
A margin call is a warning — it tells you your account equity is running low and that you need to act. A stop-out is what actually happens if you don’t act: the broker automatically closes one or more of your open positions. Think of the margin call as the siren, and the stop-out as the ejector seat.
Some traders confuse the two because they can happen almost simultaneously during fast-moving markets. Brokers often set stop-out levels slightly below margin call levels — for example, a margin call at 80% and a stop-out at 50% of required margin. For most Australian traders, the stop-out level is the more important number to check.
What to Check When Comparing Brokers
- Margin call and stop-out levels: Look in the broker’s PDS or trading conditions page. Common stop-out levels are 50% or lower — the higher the stop-out level, the sooner your trades get closed.
- Notification method: Does the broker alert you by email, SMS, and in-platform notification? A single email you miss at 3am can mean a blown account by morning.
- Negative balance protection: Confirm this is offered to retail accounts. ASIC-licensed brokers are required to provide it, but always verify it’s stated in the PDS.
- Margin calculator tools: Some platforms let you calculate margin requirements before you enter a trade. Use our margin calculator to check your exposure before opening a position.
- Low-latency execution: Brokers like Pepperstone are known for fast execution and clear margin policies, which matters when markets move quickly and every second counts during a margin call event.
See our picks for the best CFD brokers in Australia — all ASIC-licensed, all live-tested by our team.
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