What is margin call?

A margin call occurs when a trader's account equity falls below the required margin level set by the broker. This typically happens when the market moves unfavorably against the trader’s position, leading to losses that deplete the account’s margin. When a margin call is triggered, the broker will notify the trader to either deposit additional funds to restore the required margin or close some of their open positions to reduce the margin requirement. Failure to act on a margin call can result in the broker liquidating positions to prevent further losses. Margin calls serve as a risk management tool for brokers and are important for maintaining adequate account levels in leveraged trading environments.