What Is a Margin Call in the Context of Futures Trading?
A margin call is a demand from a broker to an investor to deposit additional funds or securities to bring the margin account up to the required maintenance margin. This occurs when the value of the assets in the margin account falls below the broker's minimum requirement, usually due to adverse price movements.
Failure to meet a margin call promptly results in the forced liquidation of the trader's position. It is a mechanism to protect the broker from potential losses.
