What is Margin Call Stocks?
A margin call is when a stocks trader's account free margin goes below the required margin level that is set by the broker. This means that because the free margin in the trader's account has gone below the required margin level then the trader gets a margin call and some of the open trades in stocks trader's are closed by the broker until this margin level goes back up to above what is required 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 the broker.
What is Stock Margin Requirement Level?
Now if Your Stocks Leverage is 100:1
When trading if you have $1,000 & use stocks leverage option of 100:1 & buy 1 standard lot for $100,000 your margin on this trade is $1000 dollars in your stocks account, this is money which you will lose if your open trade goes against you the other $99,000 that is borrowed, the broker will close the open stocks trade transactions automatically using a Stock Margin Call once your $1,000 has been taken by the stocks market.
But this is if your stocks broker has set 0% Stock Margin Requirement before closing your stock trades automatically using this Margin Call.
What is 20% Stock Margin Requirement Level?
For 20% margin requirement before closing your stock trades automatically using a Margin Call, then your transactions will be closed once your balance gets to $200 - at $200 you'll get a margin call.
What's 50% Stock Margin Requirement Level?
For 50% requirement of this level before closing your stock trades automatically using a margin call, then your transactions will be closed once your balance gets to $500 - at $500 you'll get a margin call.
What's 100% Stock Margin Requirement Level?
If the broker sets 100% margin requirement of this level before automatically closing your open trade transaction positions automatically using what is known as a Margin Call - at $1,000 you'll get a margin call, then your stock trades will be closed once your balance gets to $1,000: Meaning the stock trades will close-out as soon as you execute a 1 standard lot on this stock account because even if you pay 1 pips spread your stocks account balance will get to $990 & the needed margin requirement percentage is 100% i.e. 1,000 dollars, therefore your stocks orders will immediately get closed using a Margin Call once your margin requirement falls below 100%.
Most stocks brokers don't set 100% margin requirement, but there are those stock brokers that set 100% margin are not suitable for you at all, even those stocks brokers that set 50% margin requirement level are still not suitable. Choose those brokers set their margin requirement at 20% margin requirement level, in fact, those brokers that set it at 20% Stock Margin Requirement are the best because the likely hood they closeout your trade using a Stock Margin Call is reduced as shown in the examples above.
To Know More about Stock Leverage & Margin - How Do You Read the Topics Below:
Stocks Leverage and Margin Explained
