Margin Call

A margin call is a demand — or in crypto, usually an automated warning — that a leveraged position's collateral has fallen near the minimum required, and that the trader must add funds or reduce the position to avoid forced closure. It is the last checkpoint before liquidation.

For example, suppose you open a leveraged long with $1,000 margin and the exchange requires maintenance margin of $500 for the position size. If losses shrink your margin toward $500, the platform may notify you that liquidation is approaching; deposit more collateral or close part of the position and the pressure eases, do nothing and the position is liquidated once the threshold is crossed.

The term comes from traditional brokerages, where a broker would literally call clients to demand more funds. Crypto exchanges rarely wait: many skip a meaningful grace period and liquidate automatically the moment maintenance margin is breached, especially during fast moves. A common misconception is that you will always get time to respond to a margin call; in practice, treating the liquidation price shown at order entry as the real deadline — and sizing positions so it stays far away — is safer than counting on a warning.