What are margin calls?

A margin call is when you need to add more money to your account because you're using borrowed money to buy things.

Imagine you have a piggy bank with $10 in it, and you want to buy candy that costs $20. You ask your friend for $10 so you can buy the candy. But then you eat all the candy and only have $5 left in your piggy bank. Your friend says, “Hey, I gave you $10, but now you only have $5. You need to give me some more money or I’ll take back my $10.” That’s like a margin call, it's when you need to add more of your own money to keep using borrowed money.

When you get a margin call, it means the person (or bank) who lent you money wants you to put in more of your own cash. If you don’t, they might take back some or all of their loan, like taking back the $10 from your piggy bank.

You can think of it like this: You're playing a game with borrowed coins, and if you lose too many, you have to add more of your own coins to keep playing.