Trading
Margin Call
A broker's demand for additional funds when account equity falls below the required minimum.
Definition
A margin call occurs when the value of a trader's margin account falls below the broker's required maintenance margin. When this happens, the broker demands that the trader deposit additional funds or securities to bring the account back to the minimum value. If the trader fails to meet the margin call, the broker may liquidate some or all of the trader's positions to cover the shortfall. Margin calls typically occur during periods of high market volatility when positions move against the trader. To avoid margin calls, traders should maintain adequate free margin and use appropriate position sizing.