What Is the Mechanism of a “Margin Call” and What Triggers It in a Crypto Derivatives Exchange?
A margin call is a notification from the exchange requiring a trader to deposit additional funds to bring their margin balance back up to the maintenance margin level. It is triggered when the equity in the trading account falls below the required maintenance margin due to adverse price movements.
If the trader fails to meet the margin call, the exchange will automatically liquidate a portion or all of the trader's positions to cover the shortfall.
