What is Margin Call?
Let's find out Margin Call meaning, definition in crypto, what is Margin Call, and all other detailed facts.
Margin call refers to the scenario when an investor’s account falls below the maintenance amount. Securities purchased using borrowed money (usually a mixture of the investor's own money and money obtained from the investor's broker) are held in an investor's margin account.
A margin call is usually executed when there is a danger of running out of funds, especially as a result of a losing trade. To prevent having to cancel a position, a trader might add money to his account. If adding funds to the account is not a practical solution, the position must be closed.
However, the brokerage can perform this without needing consent from the trader.
Traders, on the other hand, are able to utilize stop orders to decrease risk exposure and make sure that margin calls won’t get triggered. These orders are basically instructions to purchase or sell an asset on a trading platform and cryptocurrency exchanges.
Besides, they are developed to safeguard users from huge losses during high volatility and swings periods. Traders can also specify the precise quantity that an asset must decrease in order for a margin call to be performed.