Margin Call
Your broker's demand to add funds when losses push your account below the margin it needs to hold your position.
Definition
A margin call is a notice from your broker that your account equity has fallen below the required margin and you must deposit additional funds to restore it. It is triggered when mark to market losses pull your balance under the maintenance margin. The call specifies the shortfall amount you need to cover to keep the position open.
Why it matters
A margin call is a warning that leverage has turned against you. Acting fast — by adding funds or trimming the position — keeps you in control. Ignoring it hands control to the broker, who can square off your trade to protect against further loss, often at a poor price during a volatile move. Margin calls are most common in fast-falling markets, when volatility also pushes margin requirements higher.
Example
You hold an index future that needed Rs 1,10,000 of margin. A sharp fall delivers MTM losses that drop your usable balance to Rs 80,000, below the Rs 85,000 maintenance level. Your broker issues a margin call for the Rs 5,000-plus shortfall. You either add the funds or risk the broker closing the position to bring the account back into line.
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