What Is a ‘Margin Call’ and What Triggers It?
A margin call is a demand from the clearinghouse or broker for a trader to deposit additional funds into their margin account. It is triggered when the account equity falls below the maintenance margin level due to losses on the futures position.
The trader must meet the call immediately or risk having their position forcibly liquidated.
Glossar
Financial Panic Triggers
Catalyst ⎊ Financial panic triggers are specific events or signals that initiate widespread fear and irrational selling across financial markets.
Bear Market Triggers
Catalyst ⎊ Bear market triggers in cryptocurrency derivatives represent specific events or conditions initiating substantial price declines, often amplified by leveraged positions and market microstructure dynamics.
Short Squeeze Triggers
Catalyst ⎊ A short squeeze trigger, within cryptocurrency, options, and derivatives markets, represents an event initiating rapid short covering as bearish positions face escalating losses.
Loan Health Triggers
Metric ⎊ Loan health triggers are defined by specific metrics, primarily the collateralization ratio, which compares the value of the collateral to the outstanding loan amount.
Early Liquidation Triggers
Condition ⎊ These are specific, often dynamically calculated, thresholds that, when breached by market movement or margin depletion, automatically initiate the liquidation process for a leveraged position.
Forced Closure Triggers
Mechanism ⎊ Forced closure triggers are predefined quantitative conditions that initiate the automatic liquidation of a leveraged trading position to prevent the account balance from falling below zero.
Assignment Triggers
Trigger ⎊ Assignment triggers are specific events that initiate the fulfillment of an options contract obligation for the short position holder.
Avoiding Liquidation Triggers
Mitigation ⎊ The practice of actively managing leveraged positions to prevent the account's equity from falling below the maintenance margin level constitutes a core risk mitigation effort.
Quick Liquidation Triggers
Mechanism ⎊ Quick liquidation triggers are predefined conditions that automatically initiate the rapid closure of a leveraged trading position, typically in cryptocurrency futures or options, to prevent further losses or maintain margin requirements.
Liquidity Crisis Triggers
Trigger ⎊ Liquidity Crisis Triggers are specific events or market conditions that initiate a rapid and severe contraction of market depth, making it difficult to execute large trades without significant price impact.