How and Why Does It Happen? So the simplest answer to the question “What is a margin call” is forex trading margin call it’s a demand from your broker to put more money in your account if you want to continue to trade. The more complicated question is: how and why does this happen? Most Americans are familiar with the real estate market, where the majority of residential purchases require the buyer to put up a minimum of 20 percent of the value of the house before the mortgage company supplies the remaining 80 percent.
That’s effectively five to one leveraging. Consider also that the mortgage industry also has extensive qualifications you need to meet to take out the loan in the first place, beginning with proof of income. Your mortgage payments can only total around 30 to 40 percent of annual household earnings. You also have to have a relatively extensive record of paying your bills on time. Contrast that with the forex where the only thing you need to open your account is an ID and a credit or debit card. That’s right — you don’t need to put up any money at all.