Learn How to Trade Commodities (Collection)

Chapter 10. Coping with Margin Calls

Thanks to movies and other media outlets, many beginning traders have become overly frightened by the idea of a margin call. Truth be told, if you trade responsibly, you shouldn’t receive many, but it can—and eventually will—happen. When it does, there’s no need to panic; most margin calls can be alleviated via position adjustment instead of adding funds to the account or outright liquidating trades.

What Is Margin?

Unlike equity accounts, in which margin is granted only to a few, all futures accounts are margin accounts.

Margin is simply a specified amount of funds stipulated by the exchange and required to be held in a brokerage account to enter and keep open positions in a futures market. In its simplest ...