A deposit margin is needed to firstly open a position, and the maintenance margin is in place to keep the position open. Therefore, when a trader has encountered a number of losses and their account revaluation (equity) level falls below the minimum balance to keep positions open, this prompts a margin call, for which they must either invest more of their own funds or sell their assets in order to decrease the maintenance margin required.
Margin trading, otherwise known as trading with leverage, can result in both profits and losses for the investor, depending on if the market moves in a favourable or unfavourable direction to their position. In the latter case, professional traders run the risk of losing even more than their deposit value, as they are not covered by the negative balance protection that retail traders are entitled to. Traders should therefore firstly identify the risks associated with such trading methods before registering to trade with our spread betting and CFD trading products.