I want to know that if I take currency future contact over night with paying full exchange guided mergine but due to some bad or good news next day future contact makes gap down or gap up opening e.g. 5% or 10% from closing price , what happen to my position if I can’t pay more money as M2M mergin ,??? because exchange only ask for 2.5 to 3 % mergin on whole contact … Do I need to pay any penalties or pay full shortfall later …
In this case
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If losses are more and you don’t have enough cash, RMS may square of your position.
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Margin requirements will go up so you need to maintain span and exposure at every point of the day, if not you maybe levied margin penalty.
@siva sir …
Thank u for your valuable comment …
Just want to make it further clear …
Suppose I brought a USDINR contact at 75.0000 with 2000 rs as over night mergin and nil money left at my trading ac , but next day worst case scenario market opens at 71.0000 and , now my M2M losss will be 4000 , short fall of 2000 from mergine money , now I want to know that if RMS squreoff my position at 71.0000 , do I need to pay 2000 shortfall or any other penalty I have to face … Or mergin money 2000 is ultimate loss for me
Position will be closed, can’t guarantee the price.
Yes, you need to pay.