What is a “Call Margin”? What should you do when you receive a “Call Margin”?
“Call Margin” refers to a call from a broker or another funding source to a trader when the margin balance in their trading account falls below the minimum amount allowed by the broker or specific regulations. This mainly applies in margin trading, such as trading stocks, commodities, or currencies, where traders borrow funds from their brokers to potentially enhance their profits.
When you receive a “Call Margin,” it means you need to take immediate action. Typically, you have several options:
- Inject additional funds: You can add more funds to your trading account to meet the required margin requirements. This way, you can avoid forced liquidation of your trading positions.
- Close positions: If you cannot or do not want to inject more funds into your trading account, you can close out open positions that may lead to a margin call. This is done to minimize the risk of greater losses.
- Reevaluate your strategy: You may need to reevaluate your trading strategy and better manage risk to prevent future margin calls.
A Margin Call is a precautionary measure taken by the broker or trading platform to protect both customers and themselves from high risks. Therefore, it’s essential for traders to monitor their margin regularly and understand their trading conditions to avoid unwanted margin calls.
