What is a Margin Call or Maintenance Call?
Margin calls - also known as maintenance calls, fed calls and house calls, are brokers’ calls to deposit more money to a trader’s margin account or to sell off the a few equities/assets that the trader own. Margin calls are generated by brokers under some specific situations when a trader’s equity balance in his/her account falls shorter to the margin requirement of the brokerage firm.
The need of a margin call often arises when the prices of the securities, which a trader possesses by burrowed money from the broker, fall rapidly. The other major factor, which controls this scenario is the maintenance margin of the broker; the lesser the maintenance requirement the lesser the chance of margin call.
All margin calls give you a limited time for depositing more money or equity. If the trader does not responds to the margin call of fail to deposit, the broker have the right to sell off the assets, regardless of type, size or market position, owned by the trader to increase his or her account equity to the required level. As per margin agreements of many brokers, they are empowered for selling of the trader’s securities with out any waiting of the trader’s response.
The need of a margin call often arises when the prices of the securities, which a trader possesses by burrowed money from the broker, fall rapidly. The other major factor, which controls this scenario is the maintenance margin of the broker; the lesser the maintenance requirement the lesser the chance of margin call.
All margin calls give you a limited time for depositing more money or equity. If the trader does not responds to the margin call of fail to deposit, the broker have the right to sell off the assets, regardless of type, size or market position, owned by the trader to increase his or her account equity to the required level. As per margin agreements of many brokers, they are empowered for selling of the trader’s securities with out any waiting of the trader’s response.
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