What happens at a margin call in trading?

A margin call occurs when a trader's account equity falls below the required maintenance margin set by the broker. This situation typically arises due to adverse market movements affecting open positions, leading to losses that erode the equity available in the trader's account. When a margin call is triggered, the broker will notify the trader, requiring immediate action to restore the account to the minimum margin level.

Traders can respond to a margin call by either adding more funds to their account or by closing some open positions to reduce margin requirements. Failure to address a margin call may result in the broker liquidating positions automatically to cover the shortfall. It is essential for traders to monitor their margin levels closely to avoid significant losses and forced liquidations.