Margin Calls

A margin call happens when your equity falls below the broker’s minimum and you must add money or sell. Here is how to calculate when a margin call hits, what happens if you cannot meet it and a real stock that fell 77%.

When the call comes

Your equity is the value of your stocks minus your loan. If equity falls below the maintenance requirement, the broker issues a margin call. You must deposit cash or securities or sell holdings. Brokers can sell your positions without asking, and they are not required to wait or to call first.

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