CFD & Margin Call
In the marginal operations, the margin acts as security deposit to ensure the greatest notional value of the position considered. This method allows traders to hold a position of much larger size than the actual value of the account.
The platform includes margin management capabilities, which allows the use of leverage. Obviously it is a system that involves risks, given that the lever can act to advantage but also disadvantage the client. If the equity of the account falls below the margin requirements, the Trading Station will fire a closing order on any open positions. If the positions were open using excessive leverage or losses arising from trading resulted in an insufficient equity to maintain current open positions and the available margin of the account falls below zero, leave a margin call and all open positions will be closed ( liquidated).
Note that when the available margin of an account reaches zero, all open positions are closed. The liquidation process is entirely electronic, and there is no way to act on the order of closing of positions.
Although the margin call feature is designed to close positions when account equity falls below margin requirements, there are cases where there is no liquidity to the exact price of Margin Call. Consequently, it will be possible to go below the margin requirements at the time of execution of the orders, even if in this way the account balance becomes negative.
This applies especially in volatile market phases or when you create price gaps.
So we recommend traders to use the Stop orders to limit downside risk, avoiding the use of margin call as a last resort to stop the negotiations.
It is advised that customers always maintain a margin on the accounts of an appropriate size. Margin requirements may vary depending on account size, the presence of multiple simultaneous open positions, trading style and market conditions.