Margin Call Level

What Happens When Free Stock Indices Trading Margin Runs Out?

A margin call is when a indices trader's account free margin goes below required margin level that's set by the broker. This means that because the free margin in indices trader's account has gone below the required margin level then trader gets a margin call and some of the open trades in indices trader's are closed by the broker until this margin level goes back up to above required trading 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 indices broker.

What's Indices Margin Requirement Level?

Now if Your Stock 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 $1000 dollars in your indices account, this is the money that you will lose is your open indices trade goes against you the other $99,000 that's borrowed, indices broker will close out the open trades automatically using a Margin Call once your $1,000 has been taken by 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 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 trade account balance gets to $200 - at $200 you will get a margin call.

What is 50% Indices 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 trade account balance gets to $500 - at $500 you'll get a margin call.

What is 100% Indices Margin Requirement Level?

If broker sets 100% margin requirement of this level before closing your open trades automatically using a Margin Call - at $1,000 you will get a margin call, then your stock indices trades will be closed once your trade account balance gets to $1,000: Meaning 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 spreads your indices trading account balance will go to $990 and the needed margin requirement percentage is 100% that's 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 index brokers that set 100% margin aren't suitable for you at all, even those who set their requirement at 50% trading margin percentage level requirement are still not suitable. Choose those indices brokers set 20% margin percentage level requirement, in fact, those indices brokers that set at 20% Indices 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 example above.

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