What happens during a margin call in trading?

A margin call occurs when the equity in a trading account falls below the broker's required minimum margin level. Brokers extend leverage to enable traders to control larger positions than their account balance allows. When the value of a trader's open positions declines significantly, the equity can dip below the required maintenance margin. At this point, the broker issues a margin call, requiring the trader to deposit additional funds or risk having positions partially or fully liquidated to cover the shortfall. It is an important risk management mechanism designed to protect the broker from losses in cases where a trader's positions lose value.