What is Margin Call?
When the trades are going in negative then the margin level on account will fall. If the margin level falls 100% then it simply means that the amount in the account cannot cover the trader’s margin requirements. Now in this case the trader’s equity has fallen below the used margin. Either the trader has to put up more money into an account and if there is negative protection from the broker then you might end up losing all the funds in your account.
That’s why it is suggested to use the stop-loss feature in case trade goes wrong you will have the fixed amount of loss in your account along with that avoid margin calls at all costs.
Conclusion
Margin is the amount of capital that is deposited in the trading account. There are two types of margin one is the used margin and the other is the free margin. Used margin is the amount blocked for opening trades whereas, free margin is the amount that is free to open new trades. Along with these two terms, traders are required to know about margin level and margin call also. Margin level is the ratio of the equity in the account to the used margin whereas, a margin call is a condition where the amount in the account can no longer cover the trader’s margin requirements.