Margin Call

Predominantly the investor’s margin account comprises assets that are often purchased using borrowed funds. Their portfolio comprises assets purchased using personal and borrowed money. In order to maintain that particular account, traders need to add security deposits to the investor.

A margin call is facilitated when the funds tend to run out, especially due to losing traders. Under such circumstances, the traders can either add funds to the margin call or call off the trade altogether, by closing their position.  

The brokerage firm can exercise the same without taking any consent during a margin call. This is where stop orders are facilitated to ensure margin calls don’t trigger altogether. This ensures that the brokerage firm doesn’t incur huge losses during market volatility.