A margin call occurs when the value of a trader’s collateral falls below the required level to maintain a leveraged position. In this scenario, the trader has borrowed funds to increase their investment potential, trading more than their actual capital would allow.When market prices decline, the equity in the trading account gets reduced. If this equity drops below a specified threshold, the trading platform issues a margin call. This call requires the trader to either deposit more funds or close some positions to restore the necessary margin level.Failing to meet a margin call can lead to the automated liquidation of positions, resulting in significant losses. It’s a critical aspect of risk management in trading, emphasizing the importance of monitoring market conditions and maintaining adequate collateral. Understanding margin calls helps traders make informed decisions and better manage their investment risks.