How to face a margin call?

<p id="isPasted">Facing a margin call is a critical financial situation that requires immediate action to prevent the forced liquidation of your assets. A margin call occurs when your account equity falls below the broker's maintenance margin requirement, usually due to market volatility or excessive leverage.&nbsp;</p><p><strong>Immediate Actions to Take</strong></p><p>When you receive a notification (typically via email, SMS, or platform alert), you generally have a limited window—ranging from a few hours to five days—to restore your account's equity.&nbsp;</p><ul><li>Deposit Additional Cash: The fastest way to meet the requirement without losing your positions is to transfer cash into your trading account.</li><li>Deposit Marginable Securities: You can transfer fully paid-for securities from another account into your margin account to increase your collateral.</li><li>Liquidate Positions Manually: If you cannot add funds, sell some of your existing holdings. This generates cash to cover the shortfall and reduces your overall margin requirement.</li><li>Do Nothing (Not Recommended): If you ignore the call, the broker has the legal right to sell your securities without your consent, often at unfavorable market prices, to recover the debt.&nbsp;</li></ul><p><strong>How to Calculate the Gap</strong></p><p>Brokers require you to maintain a specific percentage of the total market value of your securities as equity.&nbsp;</p><ul><li>Maintenance Margin: Typically 25% (set by regulators like FINRA or SEBI), though individual "house" requirements can be 30–50%.</li><li>The Shortfall: If your equity is ₹10,000 but the 25% requirement on a ₹60,000 portfolio is ₹15,000, you must add ₹5,000 to remain compliant.&nbsp;</li></ul><p><strong>Strategies to Prevent Future Margin Calls</strong></p><ul><li>Maintain a Cash Buffer: Keep 20–30% more funds in your account than the minimum required to absorb daily price swings.</li><li>Use Lower Leverage: Avoid borrowing the maximum amount allowed. Using only 50–60% of your available margin significantly reduces liquidation risk.</li><li>Set Protective Stop-Losses: Use stop-loss orders to automatically exit a trade before it reaches the margin call threshold.</li><li>Diversification: Spreading investments across different asset classes (stocks, bonds, commodities) prevents a single bad trade from triggering a call.&nbsp;</li></ul>