An Automated Margin Call occurs when the value of an asset fluctuates and falls below a specified threshold, triggering a request for additional funds or collateral to maintain a leveraged position in trading. This process is commonly used by exchanges and trading platforms to manage risk.When traders borrow funds to increase their buying power, they need to maintain a minimum balance, known as margin. If the value of their investment declines, the platform may automatically issue a margin call. This requires traders to either deposit more funds or reduce their position size to avoid liquidation.Automated processes streamline this operation, ensuring quick responses to market changes without human intervention. This helps minimize losses for both the trader and the platform, maintaining financial stability.It’s important for traders to understand the risks involved with margin trading, as failure to meet an automated margin call can result in the forced sale of assets at unfavorable prices. Being proactive can help mitigate potential losses and ensure compliance with margin requirements.