Definition
A margin call occurs when the equity in a margin account falls below the broker's maintenance margin requirement. The broker demands that the investor deposit additional cash or securities to bring the account back to the required level. If the investor fails to meet the margin call, the broker can liquidate positions to cover the shortfall, often at unfavorable prices. Margin calls typically occur during rapid market declines and can force investors to sell at the worst possible time.
Formula
Example
You have $20,000 in stock bought on 50% margin ($10,000 borrowed). If maintenance margin is 25% and the stock drops to $15,000, your equity is $5,000 (33%). If it drops further to $12,000, equity becomes $2,000 (16.7%), triggering a margin call.
FAQ
What is Margin Call?
A broker's demand for additional funds when account equity falls below maintenance requirements.
How do you calculate Margin Call?
A common formula for Margin Call is: 追加保证金触发：账户权益 小于 (仓位价值 x 维持保证金百分比); 所需存款 = (仓位价值 x 维持保证金百分比) - 账户权益
Why is Margin Call important?
Margin Call helps investors evaluate trading mechanics and make more informed decisions.