Define “Margin Call” and Its Immediate Effect on an Investor’s Psychology.
A margin call is a demand from a broker or exchange for an investor to deposit additional funds or collateral to bring their margin account back up to the minimum required level. Psychologically, it creates immediate intense fear and anxiety.
It signifies impending loss and forces a rapid, high-stakes decision to either add capital or liquidate the position, often leading to irrational, panic-driven selling.
