Margin Call is a situation when a broker notifies a trader that the Margin Level has reached a certain, pre-specified, threshold. This threshold indicates that there might be a danger of needing to forcibly close some or all of trader’s positions.
With Margin Call, a broker simply alerts you that your margin level is below a specific number. At that point, you have a few options:
- do nothing and accept the risk of potential involuntary liquidation (if the Margin Level drops further);
- add more funds to your account and increase the equity and, hence, increase the Margin Level;
- close some of the positions, accepting some losses, to free up some margin, i.e. diminish Used Margin.
Brokers usually set a few Margin Call levels to alert and to allow the trader to make adjustments well before the involuntary liquidation. At CEX.IO Broker, those levels are 75%, 50%, and liquidation level of 25%.