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Margin Call

Margin Call

The term Margin Call was initially used for a situation when the broker sends the client a notification to say that, in order for an open position to be held open, additional funds must be placed on the account so as to prevent a Stop Out taking place. This was pertinent in a time when trades were mostly completed via telephone. Today Margin Call means a forced close of a trade by the broker when a certain level of drawdown is reached. This change in definition came about due to currency quotes changing rapidly and, in doing so, not allowing brokers to send the client the necessary notification about an approaching Margin Call, nor allowing the client enough time to place money on the trading account.
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