Margin Call Level
What Happens When Your Free Indices Trading Margin Runs Out?
A margin call is when a indices trader's account free margin goes below the required margin level that is set by the indices broker. This means that because the free margin in the indices trader's account has gone below the required margin level then the trader gets a margin call and some of the open trades in the indices trader's are closed by the indices broker until this margin level goes back up to above the required margin level.
Some of the open trades may be closed or all of the open trades may be closed if this margin call is automatically executed by the indices broker.
What is Indices Trading Margin Requirement Level?
Now if Your Indices Leverage is 100:1
When trading if you have $1,000 and use leverage of 100:1 and buy 1 standard indices lot for $100,000 your margin on this indices trade transaction is the $1000 dollars in your indices account, this is the money that you will lose is your open indices trade transaction goes against you the other $99,000 that is borrowed, the indices broker will close the open transactions automatically using a Margin Call once your $1,000 has been taken by the stock indices trading market.
But this is if your indices broker has set 0% Indices Trading Margin Requirement before closing your stock indices trades automatically using this Margin Call.
What is 20% Indices Trading Margin Requirement Level?
For 20% margin requirement before closing your stock indices trades automatically using a Margin Call, then your stock indices trades will be closed once your balance gets to $200 - at $200 you will get a margin call.
What is 50% Indices Trading Margin Requirement Level?
For 50% requirement of this level before closing your stock indices trades automatically using a margin call, then your transactions will be closed once your balance gets to $500 - at $500 you will get a margin call.
What is 100% Indices Trading Margin Requirement Level?
If the broker sets 100% margin requirement of this level before closing your open positions automatically using a Margin Call - at $1,000 you will get a margin call, then your stock indices trades will be closed once your balance gets to $1,000: Meaning the stock indices trades will close out as soon as you execute a 1 standard stock indices lot on this stock indices trading account because even if you pay 10 dollars spread your indices trading account balance will get to $990 and the needed margin requirement percentage is 100% that is 1,000 dollars, therefore your indices orders will immediately get closed using a Margin Call once your margin requirement falls below 100%.
Most indices brokers do not set 100% margin requirement, but there are those indices brokers that set 100% margin are not suitable for you at all, even those that set 50% margin requirement are still not suitable. Choose those set 20% margin requirements, in fact, those that set at 20% Indices Trading Margin Requirement are some of the best because the likely hood they close out your trade using a Margin Call is reduced as shown in the examples above.
To Learn and Know More about Stock Indices Leverage and Margin - How to Read the Learn Indices Topics Below:
Stock Indices Leverage and Margin Explained
Regulated Indices Broker Information: Read About Regulated Indices Broker Review
Takes 5 Minutes to Open an Account, Open an Account Early: Open Indices Account
