It is an alert send by the broker to investor when investor’s amount of margin account drops less than the broker required amount. It is notify that funds in your account has dropped below the least amount required to keep a trade position open. A margin call is actually demand by the broker that investor close an open position to reduce the maintenance margin or deposit additional funds so that margin account is carried up to minimum value.
Two types of margin are used in forex trading, initial or deposit margin and maintenance margin. The deposit or initial margin refer to minimum amount needed to open a trade position, while maintenance margin refer to an amount needed to keep the trade position open. If an open trade starts to lose money, the balance in your account starts to decrease, if it drop below the minimum value, the broker will notify you to deposit additional funds in your account to keep the trade open. If trader or investor deposit more cash, the trade position will remain open, if not, open trade position will be close.
* The finest approach to evade margin calls is to use protecting stop orders to bounds losses from any equity positions, as well as retain sufficient cash and securities in the account.