What happens during a margin call in trading?

A margin call occurs when a trader's account falls below the required equity margin level set by the broker. This typically happens when market movements lead to a decrease in the account's equity, threatening the maintenance margin requirement. When a margin call is triggered, the trader is notified and must either deposit additional funds into the account to restore equity or close out some positions to reduce the margin requirement. If the trader fails to respond adequately, the broker may liquidate positions to protect against further losses. The actions taken during a margin call can significantly impact a trader's portfolio, highlighting the importance of effective risk management.