Margin Call
A broker demand for more capital when account equity falls below the required minimum.
Also called: called · maintenance call
In plain language
A margin call arrives when losses push your equity below maintenance margin. You must add funds or reduce positions, usually within a very short window.
If you do not act, the broker closes positions for you. They choose what to sell and when, with no regard for your plan or your stop levels.
Forced liquidations tend to cluster at market extremes, which is precisely when prices are worst and liquidity is thinnest.
Why it matters
A margin call means the outcome of your trade is no longer yours to determine. Avoiding that state is a core function of position sizing.
Common mistakes
- Meeting a margin call by adding funds to a losing position rather than reducing exposure.
- Assuming a stop loss makes a margin call impossible. A gap can move equity past maintenance before the stop trades.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The capital your broker requires you to post to open and hold a leveraged position.
Using borrowed capital to control a position larger than your account balance.
The price at which a leveraged position is forcibly closed because margin is exhausted.
The decline from an account’s peak value to its lowest point before a new peak.
The firm that routes your orders to the market and holds your account.