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Margin Call

A margin call is a term used in trading to describe a situation where a broker demands that an investor deposit additional funds or securities to bring their margin account balance up to a minimum level, in order to maintain the required level of collateral for the trades they have placed.

The broker may issue a margin call when the value of the trader’s position falls below a certain amount, in which case the trader must either contribute more money to their account or close out some positions to reduce the risk. By doing this, the trader can ensure the resources necessary to cover any potential losses and keep their margin at the required level.