What Is a Margin Call?
A margin call is the warning, or the automatic action, that you no longer have enough collateral to support a leveraged position. In traditional brokerage accounts it is often a formal request to deposit funds. On crypto venues it is frequently automated: if maintenance margin is breached, the engine starts liquidation rather than waiting for you to wire money.
How Margin Calls Work
Your margin equity is collateral plus or minus unrealized P&L, after fees and funding. If losses push equity below the maintenance requirement, the venue requires more collateral or reduces the position. Cross margin uses the whole account as collateral. Isolated margin confines risk (and the call) to the margin assigned to that position.
The exact threshold, fee, and insurance-fund behavior differ by venue. The mark price, not the last traded price, is usually what decides whether you are in call or liquidation territory.
Why It Matters for Traders
A margin call is the last chance to control the outcome yourself. If you wait for the engine, you pay liquidation fees and you may be closed at a worse price than a manual reduce would have been. Position size should be set so that normal noise does not put you at the call.
How Perps Traders Use This
Know the maintenance rate, the mark, and the margin mode before you add leverage. Leave a buffer between your stop and the liquidation price. If equity is approaching maintenance, add collateral or cut size early rather than hoping for a bounce.
Common Mistakes
- Sizing from notional leverage optics instead of from the distance to maintenance.
- Using cross margin so one loser can margin-call the rest of the account.
- Assuming a stop order will always fill before the liquidation engine does.
