TL;DRA demand from your broker to deposit additional funds when your account equity drops below the maintenance margin requirement. If you don't meet the call, your positions get liquidated.
A margin call is a notification from your broker that your account equity has fallen below the maintenance margin requirement. It's a demand to deposit additional funds or close positions to bring your account back into compliance.
In futures, margin calls happen because of the daily mark-to-market process. If your open positions lose enough money during the day to push your equity below maintenance margin, you'll receive a margin call after the session closes. Some brokers also issue intraday margin calls if your equity drops sharply during the trading day.
When you receive a margin call, you typically have until the next business day to deposit enough funds to bring your account back above the initial margin level (not just maintenance). The difference between your current equity and the initial margin requirement is the amount you need to deposit.
If you don't deposit the funds in time, your broker will liquidate enough of your positions to restore compliance. They choose which positions to close and at what price. This almost always happens at an unfavorable time, because the market moved against you to cause the margin call in the first place.
Some brokers are more aggressive than others. Discount futures brokers may auto-liquidate within minutes of a margin violation rather than waiting until the next day.
Keep your account funded well above the minimum margin requirements. A common guideline is to never use more than 50% of your available margin for open positions. This gives you a substantial buffer to absorb adverse moves.
Use stop losses on every position. Stops close losing trades before they grow large enough to trigger margin calls. Without stops, a single bad trade during an overnight session can eat through your buffer while you're sleeping.
Monitor margin requirements during volatile periods. Exchanges regularly increase margin requirements when volatility spikes. If you're holding positions and margin requirements increase, you can suddenly be under-margined even though the market hasn't moved against you.
Overnight margin call
Your account has $15,000. You hold 1 ES contract (initial margin $12,650, maintenance $11,500). ES drops 80 points overnight.
The 80-point loss is $4,000, bringing your equity to $11,000. This is below the $11,500 maintenance margin. Your broker issues a margin call for $1,650 (the difference between your equity and the initial margin of $12,650). If you don't deposit by the next session, your position is liquidated.
Intraday margin call
You have $5,000 in your account and open 2 MES contracts on $500 day trade margin each. MES drops 40 points.
Each MES contract loses $200 (40 points x $5), totaling $400. Your equity drops to $4,600. Some brokers will issue an intraday margin call if the loss approaches their day trade margin threshold, especially if you're holding multiple contracts.
Ignoring a margin call and hoping the market will recover
Hope is not a strategy. Meet the margin call or close the position. Forced liquidation at the broker's discretion almost always results in worse execution.
Trading close to the margin minimum without a buffer
If your account is barely above initial margin, even a small move against you triggers a call. Maintain at least 50% excess margin above requirements.
Not checking for margin requirement changes before major events
Exchanges increase margins around elections, FOMC, and high-volatility events. A position that was adequately margined yesterday may be under-margined today.