What Happens during a ‘Margin Call’ When a Trader’s Account Falls below the Maintenance Margin Level?
When a trader's account equity drops below the maintenance margin level due to market losses, the broker issues a margin call. The trader is required to deposit additional funds or securities to bring the account back up to the initial margin level, not just the maintenance level.
If the trader fails to do so within a specified time (often very short), the broker has the right to forcibly liquidate positions in the account at the current market price to cover the losses and bring the account back into compliance. The trader is responsible for any resulting losses from this liquidation.
