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Margin calls typically end poorly for the user because they are highly correlated with the asset being in a negative position.

If you buy a $10 stock on margin, and it raises to $15, you owe Robinhood $10, and that is secured by a $15 stock. This is extremely unlikely to get margin called. Even if it does, you're up.

If you buy a $10 stock on margin, and it drops to $5 (even if just temporarily), you owe Robinhood $10 secured by a $5 stock, which puts them in a riskier position, and may margin-call to cut their losses. You get the $5 from the sale, but still owe Robinhood the initial $10.

I'm sure you can see how this can compound to amplify drops if a large number of people have bought the same thing, all on margin, and it starts dropping for whatever reason.

Edit: Follow-on

This is particularly "bad" if your goal was to "own the stock" (at pretty much any price) just so that someone else can't buy it.



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