Margin call
A margin call is a demand from a for a trader to deposit more cash or securities into an account because its equity has fallen below the required . It is the 's mechanism for protecting itself against a leveraged position that has moved far enough against the trader that the borrowed exposure is no longer adequately backed by the trader's own money.
Margin calls happen whenever losses on a leveraged position, whether in bought on margin or , eat into the account's equity past the minimum threshold the requires. The trader then has a choice, deposit additional funds or securities to bring the account back above the requirement, or close out part of the position to reduce the amount of borrowed exposure. typically give some window to respond, but that window can be short during fast-moving markets, sometimes just hours.
If the trader does nothing, or cannot come up with the funds in time, the has the right to liquidate positions in the account on its own, without needing further permission, to bring equity back to the required level. This can mean selling at a bad price in the middle of a decline, turning a temporary paper loss into a locked-in realized loss. Margin calls are one of the main reasons leveraged trading carries more risk than an unleveraged position, since a large enough adverse move can force a sale at the worst possible time.