A margin call happens when losses on a margin position eat into your required collateral. The broker asks you to add more funds or reduce exposure.
IThe term became popular through the WallStreetBets community, where “margin call” is often used as shorthand for trades blowing up after too much leverage. It’s usually not a meme moment. It’s a forced one.
Margin calls turn paper losses into immediate decisions. They force action when markets are already moving against you.
On a larger scale, margin calls can shake entire markets. A well-known example is the collapse of Archegos Capital Management, where margin calls triggered billions in forced selling across multiple stocks, amplifying losses far beyond the original positions.
Margin calls are triggered when:
- Account equity falls below the maintenance margin
- Losses increase faster than available collateral
- Leverage magnifies downside moves
- Price swings intensify overall risk
Higher leverage means less room before a call occurs.
A common mistake is assuming margin calls are unlikely. Small price moves can trigger them in leveraged positions.
Another error is reacting emotionally by adding funds without reassessing the trade. This can increase exposure just as conditions worsen.
On Stoxcraft, margin calls are discussed in Academy content covering leverage, margin, and risk mechanics.
They’re also referenced in market analysis explaining forced liquidation and why leveraged markets can unwind rapidly during stress.
