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Margin Call
A margin call is a demand from a broker or clearing house for additional funds or collateral when account equity falls below required levels. Margin calls are a central risk mechanism in leveraged oil trading.
They typically occur after adverse price movements reduce the value of open positions. Traders must respond promptly to avoid forced liquidation.
During periods of extreme oil price volatility, margin calls can cascade across the market, forcing widespread position reductions and amplifying price moves.
Professional traders plan for margin calls by holding liquidity buffers and stress-testing portfolios against extreme scenarios.