Fri. Apr 9th, 2021

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How to Avoid a Margin Call?

1 min read

A margin call occurs when the worth of the investor’s brokerage account drops and fails to satisfy the account’s maintenance margin requirement. An investor will get to sell positions or deposit funds or securities to satisfy the call . If the investor fails to hide the call within three trading days, first trade will need to liquidate its positions to satisfy the margin call .

How to avoid a Margin Call?
• Try to not spend your entire Margin Buying Power
• Avoid a concentrated portfolio by diversifying your positions
• Avoid trading on margin in highly volatile securities
• Constantly monitor your account

A margin call is activated when the investor’s equity, as a percentage of the entire market price of securities, falls below a particular percentage requirement (called the maintenance margin).

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