Trade Stock Indices

What Happens When Free Stock Trading Margin Hits and Gets To Zero?

What Happens When Free Margin Runs Out?

A trade stop out is when a trader's account free margin drops and falls below the required indices margin level which is set by broker. This means that because free margin in trader's account has dropped below required indices margin level then the trader gets a stopout and some of the open trade transactions on trader's are closed by online broker until this margin level goes back upto above required indices margin level.

Some of the open trade transactions may be closed or all of the open trade transactions may be closed out if this stopout is executed automatically by broker.

What is Stock Margin Requirements Level?

Now if Your Leverage is 100:1

When trading if you have $1,000 dollars & use leverage of 100:1 & buy 1 standard lot for $100,000 dollars your margin on this trade is $1000 in your account, this is the money that you will lose if your open trade transaction goes against you : the other $99,000 dollars that's borrowed, broker will close-out the open trade transactions mechanically/automatically using a StopOut once your $1,000 has been taken out by trading market.

But this is if your online broker has set 0 % Stock Indices Margin Requirements before closing out your stock trade transactions mechanically by using this Stop Out.

What is 20 % Index Account Margin Requirements Level?

For 20% indices margin requirement before liquidating your stock trades mechanically by using a Stop Out, then your positions will be closed once your trade account balance reaches $200 - at $200 you will get a stop out.

What is 50 percent Margin Requirements Level?

For 50% requisite of this level before stopping out your stock trade positions mechanically by using a stopout, then your trades will be closed once your trading account balance gets to $500 - at $500 you will get a stop out.

What is 100 % Margin Requirements Level?

If the broker sets 100 % margin requirement for this level before closing out your open positions mechanically/automatically by using a Stop Out - at $1,000 you will get a stop out, then your stock trades will be closed once your account balance gets to $1,000: Meaning stock trade positions will close and stop out as soon as you execute a one standard lot on this trading account because even if you pay 1 point spread your account balance will get to below $1,000 and needed indices margin requirement % is 100 % that is $1,000 dollars, henceforth your open positions will immediately get stopped out using a Stop Out once your account margin requirement drops below 100 percentage.

Most brokers do not set 100 Percent margin requirement, but there are those online brokers that set 100 Percentage margin are not good for you at all, even those who set 50 % margin requirement still are not good. Select those set 20% indices margin requirements, in fact, those brokers that set at 20% Stock Indices Margin Requirement are among the best because the likelihood they close out your trade using a Stop Out is reduced and minimized as pictured in the above illustration.

To Learn and Know More about Leverage and Stock Index Margin - How to Read the Learn Indices Topics Below:

Stock Leverage & Stock Index Margin Explained

Study More Lessons:

Forex Trading Seminar Gala

Forex Trading Seminar

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