- What is a margin call?
- How do you calculate margin requirements?
- Where can I track my use of margin?
- How to cover a margin call?
- How to avoid a margin call?
What is a margin call?
A margin call (email notification) happens when a client’s account value falls below initial margin requirements.
The Company, due to market fluctuation, might change the force-closure policy, clients should maintain the margin ratio as 100% under any circumstances, also set aside enough fund against market fluctuation.
It is a client’s responsibility to keep enough funds to fully cover the margin requirements of open positions.
How do you calculate margin requirements?
In simple terms, the margin requirement of your portfolio will reflect the level of risk associated with it. We use an in-house risk management system, a variation of SPAN. We look at the number of scenarios with the worst possible performance loss your portfolio can suffer over a specified time horizon.
To do so, SPAN uses a predefined set of parameters reflecting the market conditions of traded instruments. In the end, we get the margin requirement — the figure indicating the loss of value of the portfolio in a worst-case risk scenario.
Where can I track my use of margin?
Margin report is a module in the desktop trading platform which helps you track not only the total sum and proportion of leverage but also the entire structure of the current margin.
How to cover a margin call?
Margin call can be covered by:
- sending additional funds
- reducing position.
How to avoid a margin call?
Effective money management considerably decreases the probability to receive a margin call.
Finally, it is also highly recommended to monitor the account daily and thus be ready if the market situation changes quickly.