What is a margin call?

When trading leveraged products, sudden price movements can lead to a negative portfolio value.

At certain brokerages, when a position’s value is approaching zero, the broker will issue a margin call. A margin call is a request for an investor to deposit more funds or free up margin in their account to keep a position open. If the margin call requirements aren't met, the broker may suspend trading in the account and begin liquidating positions. Not all brokerages handle margin calls in the same way.

At etoro, a margin call is triggered when the entire portfolio (all positions combined) is close to approaching zero.

At the position level, etoro has a loss management tool known as a Stop Loss, which is an instruction to close a trade at a specific rate or amount. Although it realises a loss, it helps to prevent additional losses.

Active management of leveraged positions is strongly advised. To help this, etoro issues a non-guaranteed price alert to let you know when a position is close to being stopped out.

When might I receive a margin call on etoro?

We send you a margin call alert – within the platform and by email – when your portfolio value drops below 20% of what it was the last time you made a deposit or withdrawal, and another one if it goes below 10%.

For example, if you deposit $100 and invest all of it, leaving nothing in your ‘Cash Available’ balance, and market losses reduce your portfolio to $20, you'll get an alert.

You can then decide whether to reduce the risk of liquidation by closing positions yourself or depositing more funds. We keep sending margin call alerts to protect you from possibly incurring further losses until your portfolio value goes above 20%.

What happens if my portfolio value goes below zero?

If no action is taken and losses lead to a negative portfolio value, your account will enter liquidation, during which etoro:

• restricts the opening of new manual and copy trades
• closes all open CFD, Stock Margin, Crypto Margin, and Futures positions
• cancels any pending orders

Certain position types are unaffected by liquidation and remain open:

• Positions on non-leveraged products
• Positions in open copies

If the closure of leveraged product positions in the account is not sufficient to cover the negative balance, the account will remain in liquidation.

Liquidation may be considered a taxable event.

How can I exit liquidation?

The liquidation process is over once the account’s portfolio value is equal to or above zero. Restrictions on the account are then removed automatically.

For retail clients, if the portfolio value is still negative after the trades have closed, we will absorb the loss and reset it to zero as part of our policy of negative balance protection. We’ll let you know once we’ve done this so you can deposit more funds and continue investing as normal.

Professional clients are not covered by the negative balance protection policy, so may need to take certain actions to bring their portfolio balance above zero, such as:

• depositing funds
• closing (fully or partially) non-leveraged product positions and copies

What happens to my outstanding withdrawal requests if my account enters liquidation?

Funds that etoro has already sent and are on their way to your chosen payment method are unaffected. Any withdrawal requests that etoro has not yet processed will be cancelled.