Maintenance margin explained: how it works in forex

By Ken Chigbo, Founder, KenMacro. Published 2026-05-13.

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What is maintenance margin?

Maintenance margin is the floor of equity, expressed as a percentage of position value or a fixed currency amount, that a broker requires a client to maintain while a leveraged trade remains open. It sits below the initial margin posted at trade entry. Once unrealised losses erode account equity towards this floor, the broker classifies the account as under-margined. Maintenance margin exists because brokers extend leverage on credit and need a buffer before client losses begin eating into the broker’s own capital. The exact level is set by the broker, often guided by regulatory minimums in jurisdictions such as ASIC, FCA, or CySEC.

How traders use maintenance margin

Retail traders monitor maintenance margin through the margin level percentage displayed in MetaTrader or cTrader, calculated as equity divided by used margin. Most brokers trigger a margin call warning at 100 percent and begin liquidating the largest losing position at a stop-out level, commonly between 20 and 50 percent depending on the broker and jurisdiction. Institutional desks treat maintenance margin as a hard constraint on position sizing, calculating worst-case drawdown across correlated exposures before entry. The desk routinely sees retail accounts blown out not by directional error but by oversizing relative to the maintenance buffer, particularly around scheduled volatility events such as NFP, CPI, or central bank rate decisions when spreads widen and slippage compounds losses.

Common misconceptions about maintenance margin

Many retail traders confuse maintenance margin with initial margin. Initial margin is posted to open a position; maintenance margin is the lower threshold that keeps it open. A second misconception is that a margin call gives time to deposit funds. On most retail forex platforms, liquidation is automatic and instantaneous once the stop-out level triggers, with no human intervention or grace period. Finally, traders often assume maintenance margin is fixed. Brokers can and do raise margin requirements ahead of high-impact events, weekends, or for exotic pairs, sometimes mid-position, forcing unexpected liquidations on otherwise viable trades.

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Frequently asked

What happens if my equity falls below maintenance margin?

The broker first issues a margin call notification, signalling that equity is approaching the minimum threshold. If the trader does not deposit additional funds or close positions voluntarily, the broker will automatically liquidate open trades once the stop-out level is reached. Liquidation typically starts with the largest losing position and continues until margin level returns above the required threshold. The trader bears any negative slippage during this process.

How is maintenance margin different from initial margin?

Initial margin is the deposit required to open a leveraged position, calculated from the broker’s leverage ratio and position size. Maintenance margin is the lower equity threshold that must be preserved to keep the position open after entry. For example, a broker might require five percent initial margin to open a trade but only liquidate when equity falls below a stop-out level equivalent to roughly one percent of position value.

Can a broker change maintenance margin while I hold a position?

Yes. Brokers reserve the right to raise margin requirements at any time, typically before major economic releases, central bank meetings, elections, or weekend gaps. Exotic currency pairs and CFDs on individual equities often see margin hikes during earnings season or political uncertainty. Traders should read their broker’s terms carefully and monitor email notifications, as a sudden margin increase can push an otherwise healthy account into margin call territory.

Does negative balance protection cover maintenance margin breaches?

Negative balance protection, mandated for retail clients under ESMA and FCA rules, ensures a trader cannot lose more than their deposited capital. It does not prevent liquidation when maintenance margin is breached; rather, it caps total losses at the account balance if extreme slippage during liquidation would otherwise produce a negative figure. Professional and offshore accounts often lack this protection, meaning a maintenance margin breach during a gap event can result in a debt owed to the broker.

Educational analysis only. Past performance does not guarantee future results. Manage risk against your own portfolio.