A margin call is a demand from your broker to add funds or securities to your margin account to bring it up to the required minimum value. This occurs when the value of the securities in your account falls below a certain level, known as the maintenance margin.
Keep reading to see what you should do when a margin call is triggered and what happens if you ignore it.
📖 How are Margin Calls Triggered?
Margin calls are typically triggered when the market value of the securities you purchased with borrowed money (leverage) declines significantly. This reduction in value decreases the equity in your margin account, causing it to fall below the maintenance margin level set by your broker. The maintenance margin is usually a percentage of the total market value of the securities in the account.
🔎 What Happens When a Margin Call Is Triggered?
When a margin call is triggered, you will receive an automatic email from us informing you of your options.
You can deposit additional funds to sustain your trades, close some or all of your open positions, or wait for market changes to restore your margin levels.
It is crucial to regularly log into your trading platform to monitor your margin levels and avoid unexpected margin calls.
⏱️ How Much Time Do I Have to Act?
The timeframe to respond to a margin call can vary significantly depending on market volatility; it might take just a few minutes or up to a day. Regular monitoring and prompt action are essential to manage your trades effectively during such periods.
What Happens if I ignore the Margin Call?
If you ignore a Margin Call we will perform a Stop Out, meaning the closing of your positions. This will be done based on the best execution prices available on CAPEX.com at that time.
We reserve the right, acting reasonably, to change, at our discretion and with or without prior notice to you, the minimum Margin / Stop Out level in anticipation of evolving market conditions. We do not have any obligation and we will not be notifying you of the execution of the Stop Out when the Stop Out level is at 50%.
Can I Go into a Negative Balance?
No. We offer all our clients Negative Balance Protection. This means that you will never lose more than the amounts you invested with us.
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