What happens at a margin call?

A margin call occurs when the equity in a trading account falls below the broker's required minimum margin level. This can happen due to adverse market movements that reduce the value of open positions. When a margin call is triggered, the trader must either deposit additional funds to maintain the required margin level or reduce the size of their positions to restore compliance. If the trader fails to act, the broker may close out positions unilaterally to mitigate risk and recover losses.

It is important for traders to monitor their margin levels closely, as ignoring margin calls can lead to significant financial consequences, including the liquidation of assets.