As a beginner in the world of online investing, you may be wondering, what is a margin call Robinhood? This is the process when the trading platform requests additional funds for a trade. You can avoid a margin call by making additional deposits, selling shares, or closing down your positions. Here are the steps to follow if you face a margin call. You will need to know when your account is in danger of losing money.
As you may have heard, Robinhood recently faced a massive margin call from the clearing house. The clearing house is responsible for settling trades on Robinhood, and it needs to have adequate reserves to meet customer demand. Robinhood only had $700 million in collateral, which gave it just hours to get the rest. It was clear that the retail trader’s accounts were being harmed by the margin call.
The minimum margin required by Robinhood is $2,000. The minimum is meant to protect the trading platform and to make sure that users have enough skin in the game. Moreover, if you are a newbie or you are not experienced in the field, you should start small. Remember that you may lose your money and your borrowed money. Always do your research and make sure you understand the margin in Robinhood. This way, you won’t end up getting in trouble with your broker.
A margin call occurs when an investor’s equity is less than the minimum amount required by the broker. If you cannot bring up the equity in your account, the broker can sell your securities and impose fees and commissions. Margin calls are inevitable, so it is imperative to understand your options before you invest. This can save you thousands of dollars in the long run. However, it’s always wise to have a backup plan.