A margin call is typically enforced when funds are at risk of running out, mainly due to a losing trade. The broker will then demand that the investor deposit additional money to meet the minimum required maintenance amount to continue trading.
Traders can then add funds to their accounts to avoid having their positions closed. If they cannot add funds, then closing the position becomes inevitable. In some cases, the exchange will close the position automatically.
Traders can also calculate the amount an asset must fall for a margin call to be executed. They can use stop orders to reduce their risk exposure and prevent margin calls from being triggered.
Leverage is the capital that traders can borrow to increase the profit potential of their positions more than what th...