A Margin Call is a term used to describe the alert sent to a trader to notify them that the capital in their account has fallen below the minimum amount needed to keep a position open. The alert is typically sent from the exchange with the goal of speculating on the open positions. The back testing software that we use for this blog post is Market Muse, which will not send out an alert for any trades that are closed out at a loss. This means that because I had margin calls for two of my positions, it will appear as if I had more profit than loss. An alert is typically an automated message sent by a brokerage to the trader, who then has 15 minutes to remove the short from their account before it will be closed out, with no gain or loss would be reported by the brokerage.A margin call is a term used to describe the alert sent to a trader to notify them that the capital in their account has fallen below the minimum amount needed to keep a position open. When this happens, traders are required to deposit more capital, or liquidate a position, in order to cover their current positions. The term margin call is also used when a broker needs more capital in order to fulfill an order. This is typically called an "order to cover".The value of an account can quickly falls below the minimum amount needed to sustain a position. A margin call alerts traders that the capital in their account has fallen below this minimum. This is often used to order traders to close a position they have open and withdraw the funds in their account to replenish it. This is often used as an enforcement mechanism.
