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Crypto Terms:  Letter M

What is Margin Call?

Meaning:
Margin Call - an instance when an investor's account goes below the maintenance amount.
easy
1 minute

Let's find out Margin Call meaning, definition in crypto, what is Margin Call, and all other detailed facts.

Margin call refers to the scenario when an investor’s account falls below the maintenance amount. Securities purchased using borrowed money (usually a mixture of the investor's own money and money obtained from the investor's broker) are held in an investor's margin account.

A margin call is usually executed when there is a danger of running out of funds, especially as a result of a losing trade. To prevent having to cancel a position, a trader might add money to his account. If adding funds to the account is not a practical solution, the position must be closed.

However, the brokerage can perform this without needing consent from the trader.

Traders, on the other hand, are able to utilize stop orders to decrease risk exposure and make sure that margin calls won’t get triggered. These orders are basically instructions to purchase or sell an asset on a trading platform and cryptocurrency exchanges.

Besides, they are developed to safeguard users from huge losses during high volatility and swings periods. Traders can also specify the precise quantity that an asset must decrease in order for a margin call to be performed.

margin call<\/strong><\/a> if the market goes in the opposite way of their transactions.<\/p>\n<p>However, margin trading allows cryptocurrency traders to <strong>acquire considerably larger positions and purchase larger quantities of cryptocurrencies<\/strong>, which could not be feasible without other types of trading.<\/p>\n<p>Since margin levels vary, a trader can borrow as low as 10% of the cryptocurrency holding or more. To participate in margin trading, users are required to have a margin account. Besides, trading under typical conditions necessitates a consistent cash balance.<\/p>\n<p>There are two labels for margin traders &ndash; margin bear and margin bull. <strong>A margin bear<\/strong> is a label given to a trader who goes \"short\" on margin. <strong>A margin bull<\/strong>, on the other hand, is the label given to a trader who goes long on margin.<\/p>","definition":"a method of trading cryptocurrencies in which a trader borrows funds from a broker.","status":"published","meta_title":"What is Margin Trading? Definition & Meaning | Crypto Wiki","meta_description":"Margin Trading meaning: Margin Trading - is a method of trading cryptocurrencies in which a trader borrows funds from a broker.","meta_keywords":null}" :prev-section="{"id":481,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Man-in-the-middle_attack","level":"easy","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2024-01-08T04:30:02.000000Z","slug":"what-is-man-in-the-middle-attack-mitm","title":"What is Man-in-the-Middle Attack (MITM)?","section":"M","keyword":"Man-in-the-Middle Attack (MITM)","content":"<p>A <strong>man-in-the-middle attack (MITM)<\/strong> is a type of cyberattack where the attacker intercepts a conversation between two parties, eavesdrops on the content, and may be able to modify the information transmitted by one or both parties. The term is not to be confused with a meet-in-the-middle attack.<\/p>\n<p>The two parties being intercepted believe that they are communicating directly and securely. The perpetrator acts as a third party, intercepting the information, and is able to send new messages or modify them to appear as if they were sent from one of the two parties.<\/p>\n<p>Man-in-the-middle attacks often occur when users connect to unprotected Wi-Fi networks. The goal of such cyberattacks is to <strong>steal sensitive information<\/strong>, such as login or banking details, spy on the victims, or modify and corrupt data.<\/p>\n<p><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-encryption/">Encryption can protect users from experiencing MITM attacks. In some cases, attackers may employ methods like <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-phishing/">phishing to trick users into visiting scam websites that appear legitimate. Data acquired from phishing websites can be harvested or recorded with little to no trace, meaning that users often don&rsquo;t know they fell victim to a MITM attack.<\/p>\n<p>Man-in-the-middle attacks attempt to <strong>avoid mutual authentication<\/strong>. This means that the attacker must impersonate each end of the conversation well enough to convince the parties that the conversation is not intercepted. <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptography/">Cryptographic protocols rely on endpoint authentication to prevent MITM attackers from interfering.<\/p>\n<p>Transport Layer Security, or TLS, uses a mutually trusted certificate of trust to authenticate the identities of the parties involved in the conversation.<\/p>","definition":" a type of cyberattack where the attacker eavesdrops on a conversation between two parties.","status":"published","meta_title":"What is Man-in-the-Middle Attack (MITM)? Definition & Meaning | Crypto Wiki","meta_description":"Man-in-the-Middle Attack (MITM) meaning: Man-in-the-Middle Attack (MITM) - a type of cyberattack where the attacker eavesdrops on a conversation between two parties.","meta_keywords":null}" :model="{"id":474,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Margin_(finance)#Margin_call","level":"easy","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2024-01-08T03:02:00.000000Z","slug":"what-is-margin-call","title":"What is Margin Call?","section":"M","keyword":"Margin Call","content":"<p><strong>Margin call refers to the scenario when an investor&rsquo;s account falls below the maintenance amount. <\/strong>Securities purchased using borrowed money (usually a mixture of the investor's own money and money obtained from the investor's broker) are held in an investor's margin account.<\/p>\n<p>A margin call is usually executed when there is a danger of running out of funds, especially as a result of a losing trade. To prevent having to cancel a position, a trader might add money to his account. If adding funds to the account is not a practical solution, the position must be closed.<\/p>\n<p>However, the brokerage can perform this without needing consent from the trader.<\/p>\n<p>Traders, on the other hand, are able to utilize <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-stop-loss-order/">stop orders<\/strong><\/a> to decrease risk exposure and make sure that margin calls won&rsquo;t get triggered. These orders are basically instructions to purchase or sell an asset on a trading platform and cryptocurrency exchanges.<\/p>\n<p>Besides, they are developed to safeguard users from huge losses during high volatility and swings periods. Traders can also specify the precise quantity that an asset must decrease in order for a margin call to be performed.<\/p>","definition":"an instance when an investor's account goes below the maintenance amount.","status":"published","meta_title":"What is Margin Call? 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He&rsquo;s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain &amp; Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin 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Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens 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