Let's say the investor had a bullish outlook and used his entire credit facility to buy RM200,000 worth of shares. Unfortunately, the next day the Federal Reserve Bank in Washington raises the interest rates and the world stock markets tumble. The KLSE follows and within that day, the value of his shares drops to RM149,000.

On the next business day, the investor receives a margin call. The investor is told to top up his account with at least RM1000 or his shares would be forced-sold to bring back the ratio of debt to equity of 1.5. Because the equity is only RM149,000 and the loan is RM100,000, the ratio is now 1.49. Normally most brokers will allow the investor three days to meet a margin call.

However, it is up to their discretion to force-sell at any time once the ratio drops below 1.5. This minimum requirement is stated in the KLSE Business Rules to protect the stockbroker from an over-loss. Over-loss means to lose more than the collateral deposited by the investor.

This is an unusual case but it can happen. There were many cases of over-loss in the market panics of 1987 and 1998. Investors refusing to cut losses often accelerate over-losses, which have resulted in bankruptcies for many leveraged investors and capital losses to some brokers.