Marginhäviötä

Marginhäviötä refers to losses incurred when trading with leverage, also known as margin trading. In this type of trading, investors borrow funds from a broker to increase their position size beyond their own capital. While leverage can amplify potential profits, it also magnifies potential losses.

A marginhäviötä occurs when the market moves against the trader's position, causing the value of their investment to fall below the margin level required by the broker. Brokers typically maintain a margin requirement, which is a percentage of the total trade value that must be covered by the trader's own funds. If the losses erode this equity to a certain point, known as the maintenance margin, the broker will issue a margin call.

A margin call is a demand from the broker for the trader to deposit additional funds to bring their account equity back up to the required level. If the trader fails to meet the margin call, the broker has the right to forcibly close the open positions. This forced liquidation often happens at unfavorable prices, locking in the loss and potentially exceeding the trader's initial investment.

The risk of marginhäviötä is a significant concern for traders using leverage. It highlights the importance of understanding margin requirements, risk management strategies such as stop-loss orders, and the potential for rapid and substantial losses when trading on margin. The higher the leverage used, the greater the risk of marginhäviötä.