What happens if your equity is above the maintenance margin? What does a broker do if you ignore a margin call? What is liquidation?
Understand the Problem
The question is asking about the implications of equity and margin in trading, specifically regarding what occurs when equity is above the maintenance margin, what a broker does if a margin call is ignored, and the definition of liquidation.
Answer
1. Your position remains open without issues. 2. They may liquidate your position. 3. Automatically closing your position to prevent further losses.
- Your position remains open without issues. 2. They may liquidate your position. 3. Automatically closing your position to prevent further losses.
Answer for screen readers
- Your position remains open without issues. 2. They may liquidate your position. 3. Automatically closing your position to prevent further losses.
More Information
When your equity is above the maintenance margin, you are in a safe position and don't face any immediate action. Ignoring a margin call allows the broker to liquidate some or all of your securities to meet the required value. Liquidation refers to closing your positions to prevent further losses.
Tips
Ensure you act on margin calls promptly to avoid liquidation of your assets by the broker.
Sources
- Avoiding Margin Account Trading Violations - fidelity.com
- What Happens If I Can't Pay a Margin Call? - investopedia.com
- What Are Margin Calls and Liquidations? - investorlosscenter.com
AI-generated content may contain errors. Please verify critical information
