Margin call is a demand from a broker to a trader to deposit additional funds into their trading account to meet the required margin level. The causes of a margin call may vary, but it often occurs when the trader's account equity falls below the maintenance margin level due to a loss in their open positions.

Margin call can happen in any financial market, such as stocks, commodities, and currencies, where traders use leverage to increase their potential profits. However, it also exposes them to higher risks, and if the market moves against their position, the losses can exceed their account balance, leading to a margin call.

Margin call can be a stressful experience for traders as they may have to deposit additional funds quickly, or their broker may liquidate their positions to recover the losses. To avoid margin calls, traders need to manage their risk properly, use appropriate position sizing, and have a solid trading plan.

A margin call happens when a trader’s account equity falls below the required margin set by their broker. The main cause is excessive leverage, where large positions are opened with limited capital, leaving little room for price fluctuations. Sudden market volatility can also trigger margin calls, as rapid price movements reduce account value quickly. Poor risk management, such as not using stop-loss orders, increases exposure and the chance of losses exceeding available margin. Holding multiple losing trades without sufficient balance further worsens the situation. Additionally, unexpected economic events or news releases can cause sharp swings, draining equity. In short, margin calls arise when losses outweigh the trader’s available funds, signalling insufficient capital to maintain open positions.