What Is a Margin Call?

Margin calls can be painful for investors trading with borrowed cash. Here, we answer the question "what is a margin call?" and explain why they happen.

Margin call and arrow pointing to the right on highway sign
(Image credit: Getty Images)

Margin Call is a movie that chronicles the early stages of the 2008 financial crisis, where an investment bank faces collapse after taking on debts too large to handle – and has to make some tough choices under pressure to avoid going bankrupt altogether.

While individual investors may not have as many zeros in their account as the fictitious firm in this film, they too can be subject to a margin call – with potential consequences just as serious.

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Jeff Reeves
Contributing Writer, Kiplinger.com

Jeff Reeves writes about equity markets and exchange-traded funds for Kiplinger. A veteran journalist with extensive capital markets experience, Jeff has written about Wall Street and investing since 2008. His work has appeared in numerous respected finance outlets, including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today and CNN Money.