What Happens When Free Stock Margin Hits Zero?
What Happens When Free Indices Margin Runs Out?
A margin call is when a trader's account free indices margin goes below the required margin level that's set by the broker. This means that because the free indices margin in the trader's account has gone below required margin level then the trader gets a indices margin call & some of the open trades in trader's are closed by the broker until this indices margin level goes back up to above required margin level.
Some of the open trades may be closed or all of the open trades might be closed-out if this indices margin call is automatically executed by broker.
What's Stock Margin Requirement Level?
Now if Your Leverage is 100:1
When trading if you have $1,000 and use leverage of 100:1 & buy a trade - your indices 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 trade transactions 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 Margin Requirement before stopping out your stock trades automatically using this Indices Margin Call.
What is 20% Margin Requirement Level?
For 20% margin requirement before closing your stock trades automatically using a Indices Margin Call, then your trades will be closed once your trade account balance gets to $200 - at $200 you will get a indices margin call.
What is 50 percent Indices Margin Requirement Level?
For 50 percent requisite of this level before stopping out your stock trades automatically using a index margin call, then your open trade transactions will be closed once your account balance gets to $500 - at $500 you will get a indices margin call.
What is 100 Percent Indices Margin Requirement Level?
If the broker sets 100 Percent indices margin requirement of this level before closing out your open trades automatically using a Stock Margin Call - at $1,000 you'll get a indices 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 spread your account balance will get to $990 and 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 indices margin requirement falls below 100%.
Most brokers do not set 100% margin requirement, but there are those brokers that set 100% margin are not suitable for you at all, even those who set 50% margin requirement are still not suitable. Select those set 20 % margin trading requirements, in fact, those brokers that set at 20% Margin Requirement are some of the best because the likelyhood they close out-out your trade using a Stock Margin Call is reduced as pictured in the example above.
To Learn and Know More about Leverage & Stock Margin - How to Read the Learn Topics Below:
Stock Leverage & Stock Margin Described
What's a Trade Plan? - Written Plan Example Template
Alternatives: Automated EA Trading or Copy and Paste Signals
