What is Margin Call?
A Margin Call occurs when the value of the investor’s margin account drops and fails to meet the account's maintenance margin requirement.
When you receive a Margin Call, you will get an email from Firstrade informing you of the amount of your Call. You can also find Margin Call notifications under the Buying Power section of the Balance page when you log in to your account.
You will have to either deposit at least the exact amount of the Call to your account or sell stocks to cover the Call. If you choose to sell positions, the amount you need to sell has to be equal to or larger than the Call amount divided by the minimum maintenance margin requirement.
For example, if you have a $1,000 Margin Call and the minimum maintenance margin requirement of your position is 30%. You may either deposit $1,000 in cash or sell $1,000/30% = $3,333.3 worth of stocks.
Once you received a Margin Call, you will have to cover the call within 3 business days or Firstrade has the right to liquidate your positions to cover the call.
Common Margin Calls:
- Federal Call - A Federal Call is created by a new purchase of marginable securities in the margin account when there are not sufficient funds available. A Fed Call must be met by depositing funds and or securities by settlement date or by selling securities equaling at least two times the amount of the Fed Call.
- House Call - A House Call, also known as a "maintenance call", is created when the equity in the margin account falls below the required maintenance: 50% for a concentrated account (one single position is equal to or greater than 60% of total marginable market value) and 25% for a diversified account (no one position is greater than 60% of total marginable market value). A House Call is due upon request and may be met by depositing funds in the amount of the call, adding marginable securities or by selling securities equaling at least three times the amount of the House Call. On some occasions, certain stocks may have a higher maintenance requirement (greater than 25%) thereby raising the overall required maintenance for the account to a level greater than 25%. If you have a Fed Call and a House Call, you must meet the call with the higher dollar amount.
- Daytrade Call - A Daytrade Call is created when the account exceeds Daytrade Buying Power. If you have a Daytrade Call, the account will only have Margin Buying Power before the call is met; that means no further day trading is allowed while a Daytrade Call is outstanding. Daytrade Call can only be covered via depositing of new funds.