In case of running losses in their open positions, client’s Account Equity may fall below the Margin Requirement for the said positions.  In such a case, the trading system generates Margin Calls to be sent electronically to the client so that he/she may top up the account by remitting additional funds.

For Example:

If a client has USD 1000 in his account, let us assume three open positions

Where, IMR is Initial Margin Requirement = 1% of the open positions

          In the above case, if the client overall loses money and his losses reach $300, his Account Equity drops down to $1000 - $300 = $700

§          That is, his account equity drops down to a level where the required margin is exactly equal to the Account Equity.

§          A margin call would be generated as soon as Margin Required > Account Equity.

§          The frequency of the margin calls vary from one service provider to another.