{"term":{"slug":"margin-call","term":"Margin Call","definition":"A notification or automatic action triggered when your account equity falls below the required margin level. In prop firm trading, margin calls are effectively replaced by drawdown limits -- the firm terminates the account rather than requesting additional funds.","extendedExplanation":"Traditional margin calls in retail trading require the trader to deposit more money or have positions liquidated. In prop firm trading, there is no mechanism to deposit additional funds. Instead, the drawdown floor acts as the ultimate margin call -- breach it and the account is terminated.\n\nSome prop firms have an intermediate warning system. They may auto-close positions or lock the account for the day when the daily loss limit is approaching. Others simply terminate the account the moment any limit is breached.\n\nUnderstanding the relationship between margin requirements and drawdown limits is important. Even if the platform allows you to open a large position (because margin requirements are met), the position might violate your daily loss limit if it moves against you. Always calculate risk based on drawdown limits, not platform margin.","exampleWithNumbers":"Apex $100K with $3,000 trailing drawdown. Platform margin for 1 ES contract: ~$15,840. You can technically hold 6 ES contracts (margin: $95,040). But 6 ES contracts with a 10-point adverse move = 6 * 10 * $50 = $3,000 -- your entire drawdown. The platform margin says you can trade 6 contracts. The drawdown math says you should trade 1-2.","category":"risk","relatedTerms":["leverage","drawdown-floor","daily-loss-limit","equity-based-drawdown"]},"_links":{"self":"https://runvigil.app/api/glossary/margin-call","page":"https://runvigil.app/learn/margin-call","allTerms":"https://runvigil.app/api/glossary","learn":"https://runvigil.app/learn"}}