A margin call is a kind of warning that a broker puts forward in relation to a trader. Its essence is that the account should be replenished so that part of the equity and, accordingly, the total value of the account grows to the minimum value specified in the service requirement. A margin call occurs when the percentage of the trader's equity decreases to the level set by the broker in its rules.
A margin call most often signals that the price of assets that are on the investor's account has decreased. This may occur as a result of the fact that one or several positions that are traded on the market have fallen. If such a situation occurs, the trader will need to top up his account by depositing additional funds or margin securities. So he will be able to increase the amount of available funds. Or he will have to sell part of the assets from his account to free up enough margin and meet the broker's requirements again. If he does not solve the problem of lack of margin, the broker will be forced to close positions automatically.
Stop Out – forced closing of the Client's positions at current market prices. This happens when the ratio of the amount of your deposit and current loss to the amount reserved for current open collateral positions (fund level) becomes equal to or less than the stop-out level established by the Company.
Positions are closed in a mandatory order according to the quotations that were in the quotation stream at the time of the occurrence of this ratio.
Closing takes place alternately until the level of funds becomes higher than the set stop-out level.
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