Margin call
TradingDefinition
A demand from your broker for additional cash or securities when your margin account equity falls below the maintenance margin requirement. Must be met within hours or the broker will sell positions at market — possibly at the worst time — to bring the account back into compliance.
Famous casualties: hedge fund LTCM (1998), Bill Hwang/Archegos (2021). Retail traders also blew up in 2020 and 2022 from leveraged ETF positions.
Famous casualties: hedge fund LTCM (1998), Bill Hwang/Archegos (2021). Retail traders also blew up in 2020 and 2022 from leveraged ETF positions.
Example
You bought $20K of stock with $10K cash + $10K margin. Stock falls to $14K. Your equity is now $4K against $10K of margin debt — only 28.5% equity, below the 30% maintenance level. Broker calls for $1K cash or starts selling.