A margin call is a notification from a broker requesting that a trader deposit additional funds or reduce open positions because the account equity is no longer sufficient to maintain current positions.
A margin call occurs when account equity falls below a certain percentage of the required margin, and this threshold varies depending on the broker and regulation.
If the trader does not respond in time, the broker may forcibly close positions to limit further losses. Margin calls often occur during periods of high volatility when prices move sharply against open positions.
Proper risk management, including appropriate position sizing and consistent use of stop-loss orders, can help prevent margin calls.
