What is the use of the margin call?
What is the use of the margin call?
L’margin call is the term used when a broker sends an alert to an investor informing him that the funds available in his account are no longer sufficient to maintain an open leveraged position.
How to use leverage in the stock market?
For example, if you invest €1,000 and the broker promises you a the sink of 20, he will bet €20,000 for you. Except that in the event of a 10% drop in the price of the asset, you will lose 2,000 when you have only invested 1,000.
What is the Clearing House and Margin Calls?
In the event that one of the investors cannot satisfy his margin call, the position will be immediately closed. The role of the clearing house and margin calls is to ensure that in the event of a downturn, the investor who is on the other side of the open position will receive their gain.
How to calculate margin call?
The margin call does not need a calculation formula. The trader can indeed monitor the margin level on his trading platform, which should not drop below his broker’s margin requirement level, which is usually 100%.
What is First Margin Call?
He must provide his broker: Following this first margin call, the gains/losses linked to the evolution of the barrel will be added/deducted from the newly created deposit balance. If it again fell below the maintenance margin, a new margin call would be made, and so on.
What is the margin call trigger?
In other words, if the position opened by the trader falls below the $30,500 threshold, the margin call is triggered. This is the case in our example, since the position today is $30,000, and the trigger level is $30,500.
