Margin call / Stop out levels

Margin Call @ 120% margin Level

Margin level is calculated by Equity divided by used margin. It is advised that you should either close off positions to free up margin or add additional funds to increase available margin.

Margin Call Alerts

As a broker that sends trades to the market, we are extremely risk averse when it comes to overleveraged accounts which can lead to negative balances. Negative balances can occur if you are holding exposure and the market moves to a new level which leads to a loss on your open positions greater than the balance of your account. The trades are then closed, leaving a negative balance.

It's important to note that if your account balance goes negative you will be required to deposit funds to bring the account balance back to 0. This doesn’t happen very often but if you are hovering in Margin Call territory then your chances of a negative balance occurring are much higher.

On a B-book broker when an account goes negative, the broker has first of all made the entire deposit as profit and since the clients trades did not go to market the broker doesn't owe that money to a counterparty AKA liquidity providers. With ExpressOptions if an account goes negative the trades were executed in the real market so we have real exposure with our Prime Brokers and liquidity providers and we would owe that negative balance to those counterparties.

This is obviously something that we never want to see happen and is one of the reasons why we endeavour to contact you when overexposed to ask that you check and reduce your exposure to ensure it doesn’t get to that.

Margin Stop Out @ 100% margin Level

This means that Equity divided by used margin equals 1. In other words equity has dropped so low that it equals the used margin. For example if you have $5,000 balance, $500 margin and a -$4,500 sustained loss resulting in $500 running equity. In the event of a market gap, the Margin Stop may not protect an account from going into negative balance. The more exposure carried, the higher the risk of a negative balance occurring.