1. What is Margin Call?

A margin call occurs when the value of an investor's margin account falls below the broker's required amount. It's a demand by the broker for the investor to add more money or securities to the account.

2. How Does the Calculator Work?

The calculator uses the margin call equation:

Where:

• \( Call \) — Amount needed to meet margin requirements (USD)
• \( Required \) — Broker's required margin amount (USD)
• \( Available\ Margin \) — Current available margin in account (USD)

Explanation: The equation calculates the difference between what's required by the broker and what's currently available in the margin account.

3. Importance of Margin Call Calculation

Details: Understanding margin calls helps investors manage risk, avoid forced liquidation of positions, and maintain adequate account balances.

4. Using the Calculator

Tips: Enter the required margin amount and available margin in USD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What happens if I don't meet a margin call?
A: The broker may liquidate positions in your account to cover the shortfall without your permission.

Q2: How quickly must I meet a margin call?
A: Typically within 2-5 days, but this varies by broker and market conditions.

Q3: Can I prevent margin calls?
A: Yes, by maintaining adequate margin, using stop-loss orders, and monitoring positions closely.

Q4: Is margin trading risky?
A: Yes, it amplifies both gains and losses, making it a high-risk strategy.

Q5: What's the difference between maintenance margin and initial margin?
A: Initial margin is required to open a position, while maintenance margin is the minimum required to keep it open.