Stock Margin Call Level
What Happens When Free Stock Margin Runs Out?
A indices margin call is when a trader's account free margin goes below the required margin level that's set by the broker. This means that because the free margin in the trader's account has gone below required margin level then trader gets a margin call & some of the open trades in trader's are closed by the broker until this margin level goes back up to above required margin level.
Some of the open trades might be closed or all of the open trades may be closed-out if this margin call is automatically executed by broker.
What's Margin Requirement Level?
Now if Your Stock Leverage is 100:1
When trading if you have $1,000 and use leverage of 100:1 & buy a trade - your margin on this trade transaction is $1000 dollars in your account, this is the money that you will lose is your open trade transaction moves against you the other $99,000 that is borrowed, broker will close out the open trades automatically using a Stock Margin Call once your $1,000 has been taken by the stock trading market.
But this is if your broker has set 0 percent Indices Trading Margin Requirement before closing out your stock trades automatically using this Margin Call.
What is 20% Indices Margin Requirement Level?
For 20% indices margin requirement before closing your stock trades automatically using a Margin Call, then your stock trades will be closed once your trade account balance gets to $200 - at $200 you will get a margin call.
What is 50 percent Margin Requirement Level?
For 50 percent requirement of this level before closing out your stock trades automatically using a margin call, then your open trades will be closed once your account balance gets to $500 - at $500 you will get a margin call.
What is 100 Percent Margin Requirement Level?
If the broker sets 100 Percent margin requirement of this level before liquidating your open trades automatically using a Stock Margin Call - at $1,000 you will get a margin call, then your stock trades will be closed once your trade account balance gets to $1,000: Meaning stock trades will close-out as soon as you execute a 1 standard lot on this stock account because even if you pay $10 dollars spreads your account balance will go to $990 & needed margin requirement percent is 100 Percent that is $1,000, therefore your orders will immediately get closed using a Stock Margin Call once your margin requirement falls below 100%.
Most brokers do not set 100% indices margin requirement, but there are those brokers that set 100% indices margin aren't suitable for you at all, even those who set 50% indices margin requirement are still not suitable. Select those set 20 % margin requirements, in fact, those brokers that set at 20% Indices Margin Requirement are some of the best because the likely-hood they close-out your trade using a Stock Margin Call is reduced as pictured in the example above.
To Learn and Know More about Stock Leverage and Stock Margin - How to Read the Learn Topics Below:
Leverage and Stock Margin Described
What's a Trade Plan? - Written Plan Example Template
Alternatives: Automated EA Trading or Copy and Paste Signals
